Each month, Fannie Mae’s Economic and Strategic Research Group releases an outlook detailing what the group believes is ahead for the economy and housing market. According to the most recent release, the economy has started the year off strong and the group believes its momentum will carry forward. But changing trade policy has caused some uncertainty about where things will head from here. Kim Betancourt, Fannie Mae’s vice president of multifamily economics and strategic research, says mortgage rates, in particular, could go either way. “Ongoing uncertainty around trade policy adds risk to our GDP and inflation outlooks, which may have implications for mortgage rates, although the direction – up or down – would depend on a number of factors,” Betancourt said. “Higher mortgage rates would exacerbate the existing ‘lock-in effect’ and worsen affordability, which may then weigh on home sales and mortgage origination activity. Of course, if mortgage rates move lower, we’d likely see an improvement in affordability and a corresponding pickup in housing activity.” The group expects some volatility but ultimately believes rates will remain within a narrow range, ending the year just slightly lower than they are now. (source)
