While the outlook for overall economic growth is darkening, the housing market is expected to keep up its momentum in 2016, according to Freddie Mac’s April 2016 Economic Outlook released on Friday. Freddie Mac downwardly revised its forecast for Q1 GDP growth from 1 point 8 percent down to 1 point 1 percent. In the fourth quarter, the GDP grew at a rate of 1 point 4 percent.
While the economic forecast for Q1 has slowed, the forecast looks bright for housing in 2016, however. Freddie Mac expects housing to be an engine of growth. The housing market received a boost in Q1 from increased refinance activity due to low mortgage rates. The low mortgage rates combined with solid job growth are expected to make 2016 the strongest year for home sales since the pre-crisis year of 2006 despite the persistently tight inventory of for-sale homes. Home price appreciation has also resulted in more homeowner equity during the first quarter.
As part of working toward the goal of reducing risk to taxpayers by increasing the role of private capital in the residential mortgage market, both Fannie Mae and Freddie Mac announced major credit risk transfer deals in the past week. Freddie Mac announced its intention to sell a Structured Agency Credit Risk offering worth 916 billion dollars with loans totaling $30 billion in UPB. Fannie Mae announced the completion of a Credit Insurance Risk Transfer transaction that included a pool of single-family mortgage loans with a UPB of 5 point 7 billion dollars.