Fannie Mae is expecting a “mature state of the business cycle” over the next two years.

Latest Economic & Housing Forecast Sees Both Home Sales & Prices as Declining Over Coming Two Years

For the first time ever, economists with the mortgage giant Fannie Mae have provided an economic and housing forecast into 2023.  (Typically, Fannie limits its forecasting to one-year increments.)

Fannie projects that inflation may further accelerate while the impact of mortgage rates will likely be benign due to the Federal Reserve’s disciplined, transparent, clear plans to gradually withdraw its support for mortgage markets in the coming months.

Fannie Mae stated in its forecast that it expects the economy to have entered the “mature state of the business cycle” and Fannie’s economists acknowledged a risk of another recession coming into 2023.

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Fannie’s Forecast Includes Modest Rise in Mortgage Rates

Economists with Fannie Mae are predicting that rates on 30-year mortgages will rise modestly over the next two years…3.4% by the end of 2022 and a leveling off at 3.5% in the last nine months of 2023.

Compared to three other heavy-hitting economic prognosticators, Fannie’s forecasting over the next two years is, in fact, modest.  Less modest are economists with both Freddie Mae, the National Association of REALTORS® and the Mortgage Bankers Association.  Freddie Mac’s experts are predicting 30-year fixed rates to hit 3.7% by Q4 2022.

Economists with Freddie Mac rendered a one-year only economic and housing forecast.)  Economists with the National Association of REALTORS® agree with Freddie’s forecast of a 3.7% rate on 30-year fixed mortgages by Q4 2022.  The Mortgage Bankers Association economists forecast 30-year fixed mortgages rates to go up to 4.0% by the end of Q4 2022 and to 4.3% by the end of 2023.

One Caveat

Fannie Mae Chief Economist Doug Duncan said that the Federal Reserve left themselves “…some room for policy change” regarding its two-month window to evaluate effects of its own asset tapering schedule and of inflation. Fannie Mae economists would give themselves that same latitude regarding any policy change they may determine.

Duncan said that economists and investors both “…will have one eye on monthly inflation releases and the other eye on the Fed in the months ahead.”

Duncan emphasized, “How credible investors, business leaders, and consumers find the Federal Reserve’s evolving beliefs regarding the passing or sustained level of inflation and resulting monetary policy actions will be key – their choices will impact economic growth as well as housing and mortgage activity.”

Thanks to Fannie Mae and Inman.






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