Interest in the most popular U.S. home mortgages surged
The combined volume of single-family loans purchased by the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac totaled $909.2 billion,
up nearly 24 percent from the 2015 mark of $733 billion, an analysis of GSE’s
annual reports shows.
The GSE combined loan counts for 2016 totaled 4.2 million, up more than 13 percent
from the 3.7 million loans originated in 2015.
Fannie and Freddie are the most important sources of
liquidity in the single-family mortgage
market. The GSEs purchase and securitize more than half of all residential
loans in the U.S., making their activity an indicator of mortgage origination
Of the two GSEs, Fannie Mae saw the more significant gains
Fannie’s 2016 loan volume
of $512.6 billion was 34 percent higher than in 2014, and its loan count rose
by nearly 18 percent, to 2.5 million loans. Notably, Fannie experienced an 84 percent year-over-year surge in
refinance activity in the fourth quarter, to 459,000 refis, up from 249,000 in 2015.
During a conference call with reporters last week, Fannie Chief Executive Officer Tim Mayopoulos said the company has been expanding its reach through
innovations that are pushing the industry closer to a fully digital mortgage. Late last year, Fannie rolled out a suite of data-validation and underwriting
products known as "Day 1 Certainty." This, he said, has helped simply the loan
process by reducing paperwork and provided clarity to lenders that have been
skittish about the legal liability and buyback risk should loans default.
He also noted that the market for refinances and purchase
loans was solid last year.
“Overall, I would say that we think that mortgage market conditions
are good and stable, and we think they will continue to be for the foreseeable
future,” Mayopoulos told reporters.
Freddie’s overall 2016 volume rose by nearly 12 percent in
2016, to $393 billion, and its loan counts were up 6 percent, to nearly
1.7 million loans.
Most analysts believe that refinance activity will drop off sharply
in 2017 as interest rates rise, a factor that will lower the GSE counts as well as loan counts for other loan programs. The
Mortgage Bankers Association predicted that overall single-family originations will fall to $1.56 trillion in 2017, down from $1.89 trillion in
2016. Aside from Fannie and Freddie loans, this forecast includes the
A rise in mortgage rates toward the end of the last year
caused some unexpected results, said Daren Blomquist, senior vice president with
Attom Data Solutions. He said purchase activity tailed off after reaching
a 10-year high in the past third quarter, while refinance activity surged.
“The rise in interest rates
seems to have pushed more homeowners into risk-aversion mode, [including] locking in the
still relatively low interest rates before they rise further and pulling back
on the leveraging of home equity,” Blomquist told Scotsman Guide News. “The recent interest rate rise has also pushed
prospective buyers into risk-aversion mode, causing them to pullback in taking
on purchase debt in a less certain political environment.”