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GSEs' loan counts fall in 2017

A steep decline in home-refinancing activity in 2017 pushed down demand for the nation’s most popular home loans.


The government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac cumulatively financed 3.7 million loans in 2017, down just over 12 percent compared to the loan counts in calendar year 2016, according to the GSEs’ year-end financial reports.

fanvolThe cumulative balance of these loans totaled $845.8 billion, which was down just over 13 percent compared to 2016 volume.

fredcountsThe GSEs don’t originate loans, but purchase mortgages from lenders and then securitize them. Because of their size, the GSE new-funding data can be a good indicator of general mortgage trends. At the start of the year, analysts predicted a sharp drop in refinances for all loan products, which would be partially offset by a rise in home-purchase activity.

fredvolIn 2017, the GSEs' numbers reflected the predicted pattern.

Fannie Mae bankrolled an estimated 2.2 million loans in 2017, which include both home purchase and refinances. Fannie’s counts were down nearly 13 percent from the 2016 level. Fannie’s loan balance totaled $502 billion in 2017, down 13.6 percent.

Freddie Mac’s loan counts totaled 1.5 million, down just over 11 percent. The volume was $344 billion, down just over 12 percent.

Fannie and Freddie’s counts of refinanced loans were both down by roughly 29 percent in 2017, compared to 2016. Fannie and Freddie had a 7 percent and 11 percent increase, respectively, in home-purchase loan counts.  

Housing analysts are predicting another sharp drop in refinancing volume in 2018 for the industry as a whole, but are generally upbeat about the home-purchase market.

“It is the same story that we have been telling for a bit now,” said Mike Fratantoni, chief economist for the Mortgage Bankers Association, during a recent interview. “For the refi market, we are still expecting about a 30 percent drop from 2017 to  2018, almost entirely as a result of that increase in rates.”

As for home-purchases, however, the growing economy should propel home sales and origination volume, despite an expected boost in rates.

“That stronger economy is generally good for home sales, new construction [and] consumer outlook,” Fratantoni said. “We are seeing consumer confidence really strong right now. That largely can be tied to the strength of the job market. As long as that is in place, we still are expecting between 6 percent and 7 percent growth on the purchase side of the market.” 


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