Fannie Mae Optimistic About 2024

Despite Fannie Mae’s prediction of a slump in the U.S. economy in 2019, the company is optimistic that growth will resume by 2024. (iStock)

The most recent economic forecast from Fannie Mae predicts a slight decline for the U.S. economy in 2023, but that it will be on the mend by the following year.

The Economic and Strategic Research (ESR) Group at the mortgage giant revised its previous GDP growth prediction for 2023 downward by 0.1 percentage point, to a contraction of 0.6%. However, GDP growth was expected to pick up to 2.0% in 2024.

The amount of mortgages expected to be originated in 2022 has been increased by Fannie Mae to $2.34 trillion from $2.33 trillion, while the amount expected in 2023 has been decreased to $1.71 trillion from $1.74 trillion. Fannie Mae forecast that originations would rise to $2.11 trillion by 2024.

Weakening forward-looking indicators and the delayed impact of rising interest rates lead us to maintain our forecast that the economy will contract in 2023,” Fannie Mae said.

One option for cutting costs is to refinance a mortgage into a lower monthly payment. Credible lets you quickly and easily compare mortgage loan providers so you can select the one offering the lowest rate.


The real estate market is expected to improve in 2024.
Fannie Mae predicts rising home sales due to a combination of low mortgage rates and an improving economy through 2024. The government-backed mortgage lender anticipates a rise of 18.6 percent in home sales from its previous forecast of 5.25 million units in 2023.

A combination of factors, including falling mortgage rates, “a broader economic recovery,” and “an ongoing housing supply deficit helping drive new home sales,” led Fannie Mae to raise its home sales forecast.

According to Fannie Mae’s projections, mortgage rates will decrease slightly over the next two years. This is in part attributable to expectations that 10-year Treasury rates will decline when the Federal Reserve stops raising them, that economic growth will slow, and that the spread between Treasury and mortgage rates will narrow as a result of interest rate stability.

According to Fannie Mae, “we believe this should eventually help spur a rebound in sales.”

Higher interest rates have translated into higher mortgage rates, which has kept many homebuyers who are already dealing with high home prices on the sidelines due to affordability issues.

Sales of existing homes are expected to hit a low of 4.27 million annualized units in the second quarter of 2023 as “the full effect of higher mortgage rates and the projected recession takes hold,” according to Fannie Mae.

Consider a cash-out refinance if you have substantial debt but need money to pay it off and sufficient equity in your home. In order to find out if this is the best course of action for you, you can get in touch with Credible and speak with a home loan expert.


The increased interest rates discourage current borrowers.
In addition to discouraging first-time buyers, higher mortgage rates have also discouraged existing buyers from “taking on a new mortgage rate well above what they had previously,” as reported by Fannie Mae.

As of October, Fannie Mae reported that 80% of existing borrowers have mortgages that are at least 200 basis points lower than current market rates, and that 90% have mortgages that are at least 100 basis points lower.

According to Fannie Mae, this has caused a “lock-in” effect that will have two distinct results on the housing market. First, the rate at which new construction homes are being built will remain low. Second, as the number of available houses decreases, prospective buyers will have no choice but to focus on brand new construction.

Given this, Fannie Mae predicts that builders will prioritize more modest product offerings as the number of buyers looking to upgrade will be lower than in previous cycles.

Credible is a marketplace that connects borrowers with multiple mortgage lenders, allowing them to quickly and easily shop around for the best mortgage rate.

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