Freddie Mac released its latest monthly mortgage Outlook for May showing that the U.S. housing market is on track to eclipse last year despite weak economic growth.
Mortgage originations for the first quarter were around $60 billion above prior predictions driven mainly due to an uptick in refinances.
The percentage of borrowers who refinanced their properties with cash-out in the first quarter of 2017 was 49%, a nice jump from the fourth quarter of 2016 which saw 44%. This is the highest share since the fourth quarter of 2008, but still below the peak of 89 percent in the third quarter of 2006.
Freddie expects mortgage originations to increase to over $200 billion in 2017.
The report stated that mortgage rates have dropped approximately a quarter of a percentage point to hover right around 4% for most of the year. Freddie predicts rates will rise only slightly higher by the end of 2017.
Home sales in March were the highest since 2007 and new home sales had risen above expectations. Freddie said to expect a slight increase in home sales in 2017 to just above 6 million.
Freddie Mac’s Chief Economist, Sean Becketti had said this about the report;
“Despite weak economic growth, housing got off to a good start in 2017 because low mortgage rates have given the spring homebuying season a pleasant surprise. Mortgage rates started March just above four percent and have mostly drifted lower since then, even falling below 4 percent. With home sales, housing starts and home values up, 2017 is shaping up to be the best year for housing in over a decade.”