While the year of the purchase mortgage is coming to a close in less than two months, 2015 is not likely to waiver off of 2014’s trends.
At the end of 2013, Freddie Mac said that for the first time since 2000, the industry is going to see the mortgage market dominated by purchase activity as the refinance share drops below 50%, creating a purchase dominated market.
Now heading into 2014, the year is expected to produce much of the same.
“The housing market continues to grind its way upward, but we don’t expect a breakout performance in 2015 as the fundamentals remain somewhat muted,” said Fannie Mae Chief Economist Doug Duncan in its November 2014 Economic Outlook.
While homebuilding activity improved during the third quarter due primarily to the multifamily segment, which is expected to grow further next year, the single-family segment has been relatively flat for some time.
And while rates are hovering around 4%, the temporary burst in refinance activity appears to have subsided and is expected to turn more toward the purchase market in 2015.
“Overall, our view of housing starts, home sales, and home price trends is largely unchanged from the prior forecast – we believe that mortgage activity in 2015 will be very similar to 2014,” Duncan added.
Fannie forecasts full-year economic growth to come in at 2.5% for all of 2015, a modest increase above the 2.1% forecast for 2014.
“The pace of growth around the middle of the year was well above trend, driven by an unsustainable rebound after a weak first quarter, and we anticipate that the fourth-quarter numbers will presage a more modest pace for 2015,” Duncan said.