Doug Duncan projects mortgage lending to climb to a 17-year high in 2020

In today’s Daily Download episode , HousingWire covers a forecast from Fannie Mae’s Chief Economist Doug Duncan that projects mortgage lending is set to top $3 trillion this year. For some background on the story, here’s a summary of the article: Mortgage lending is set to reach $3.14 trillion this year, the highest since 2003, as the annual average rate for a 30-year fixed home loan falls to a record low of 3.2%, according to Doug Duncan, chief economist of Fannie Mae . Next year, rates are heading even lower, he said. In 2021, the annual average rate probably will fall to 2.8%, said Duncan, who spoke to HousingWire via a video conference call on Monday in an exclusive interview. That would be the lowest ever recorded. Duncan said his forecast is based on the open-ended commitment by the Federal Reserve to purchase $40 billion a month in mortgage-backed securities, coupled with the expectations that “margins” – meaning the difference in the yields for 10-year Treasury yield and mortgage bonds – will continue to shrink as the lending industry adjusts to doing business amid the COVID-19 pandemic. Mortgage rates are set by bond investors who decide what yield, or return on investment, they’re willing to accept. Market-watchers compare rates between long-term Treasuries and MBS to see what kind of “risk premium” lenders are adding, meaning a buffer to protect profits in case some loans go bad or other problems arise. Following the main story, HousingWire covers a report from The Mortgage Bankers Association that claims the forbearance rate has dropped to a 2-month low and a report from Unison that shows a direct correlation between a housing market’s performance and its economic resilience. The Daily Download examines the most compelling articles reported from the HousingWire newsroom. Each afternoon, we provide our listeners with a deeper look into the stories coming across our newsroom that are helping Move Markets Forward . Hosted by the HW team and produced by Alcynna Lloyd. HousingWire articles covered in this episode: Mortgage lending set to top $3 trillion as mortgage rates tumble Forbearance rate drops to 2-month low Housing market performance directly correlates with economy’s resilience