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"With the U.K.'s decision to exit from the European Union, global risks increased substantially, leading us to revise our views for the remainder of 2016 and all of 2017," says Sean Becketti, chief economist, Freddie Mac. "Nonetheless, the turbulence abroad should continue to create demand for U.S. Treasuries and keep mortgage rates near historic lows; thereby, allowing home sales to have their best year in a decade, along with a boost in refinance activity."
Results lead experts to expect growth rebound in the remaining quarters of 2016 to show GDP at 1.9 and 2.2 percent in 2016 and 2017. In light of recent global pressures, the 30-year, fixed-rate mortgage forecast has been revised down for both 2016 (by 30 basis points) and 2017 (by 50 basis points) to 3.6 percent and 4.0 percent, respectively.
Based on these low mortgage rates, expect the refinance share of originations to rise to 49 percent for 2016, 8 percentage points above last month's forecast. This translates to about $100 billion more in originations, bringing the total for 2016 to $1,825 billion.
With June's much-improved employment report over May's release, expect unemployment to average 4.9 percent in 2016 and 4.8 percent in 2017.
The house price appreciation forecast for 2016 remains at 5.0 percent, and in 2017, 4.0 percent.
For more information, visit www.freddiemac.com.
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