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GSE volume through third-quarter 2015 surpasses total for all of last year


Mortgage business in the most popular home-loan types boomed through the first nine months of the year.

The combined volume of single-family loans purchased and guaranteed by Fannie Mae and Freddie Mac has already surpassed the entire year’s total for 2014, according to quarterly reports released last week by the government-sponsored enterprises (GSEs).

Fannie Mae volume

Combined GSE volume reached $640.7 billion for the nine months that ended this past third quarter. That beats the total of $624.8 billion for all of 2014.

Freddie Mac volume

Freddie’s volume through September of this year, at $274.9 billion, has surpassed its 2014 total of $255 billion, whereas Fannie’s volume of $365.8 billion is just shy of the entire 2014 total of $369.8 billion, the reports indicate.

Fannie Mae counts

Comparing GSE volumes through September to the same nine-month period in 2014, Freddie’s single-family volume was up 49 percent and Fannie’s 39 percent, the GSEs reported.

Freddie Mac counts

Fannie and Freddie do not originate loans, but purchase and securitize more than half of home loans from lenders, thus GSE volumes and loan counts are a good indicator of overall mortgage activity.

Loan counts also are running far ahead of the 2014 pace.

Fannie’s loan counts were up nearly 26 percent, to 1.65 million, through the first nine months of 2015 compared to the same period in 2014, and Freddie’s were up nearly 36 percent, to 1.2 million.

Volumes and counts are still running significantly lower than during the refinance boom in 2013, however.   

Last week, Fannie and Freddie reported disappointing third-quarter earnings, largely due to losses on derivatives used to hedge against the risk from changes in interest rates.

Perception of tight credit 

In calls with the media last week, however, Fannie Chief Executive Officer Tim Mayopoulos and Freddie's CEO Donald Layton emphasized that single-family volumes were up significantly and the core business is strong. The increased totals over a weak 2014 have mostly been driven by refinances, but home purchase activity has also picked up. GSE volume to date has outpaced the companies' own forecasts. Fannie and Freddie have predicted that the single-family orginations in the entire mortgage mortgage will end the year 30 percent higher in 2015 than 2014, reaching $1.7 trillion. 

Responding to a question from a Wall Street Journal reporter, Mayopoulos said refinances outpaced home purchases through September because of the low interest rates, but home-purchase activity may not be as strong as it could be.

“We've done some research in this area, and we see that, especially among younger people and minority people, that they have a tendency to believe that they need higher credit scores to qualify for a loan than is in fact the case,” Mayopoulos said. “As a result, they may choose just not to apply for those loans or to pursue buying a house.”

Layton said first-time homebuyers have been the most active since the financial crisis. He also said a greater share of borrowers are obtaining loans through small and mid-sized banks.

 “About 50 percent of our business is with these lenders compared to just 16 percent before the financial crisis,” Layton said. 


 

Questions? Contact at (425) 984-6017 or victorw@scotsmanguide.com.

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