Healthy market for sales predicted into next year

Real Estate Watch

November 07, 1999

With interest rates remaining at affordable levels and home sales challenging last year's records, Freddie Mac expects the healthy housing market to continue into 2000.

Freddie Mac supplies funds to lenders by purchasing mortgages and repackaging them into marketable securities. It expects the economy to grow by 2.5 percent next year.

While mortgage originations for single-family homes swelled to $1.5 trillion in 1998, Freddie Mac economists expect 1999 to finish lower at $1.3 trillion, a 10 percent drop.

"Sales should decline slightly through most of next year partly because many homeowners will be unwilling to give up their 6.5 to 7 percent mortgages in order to trade up to larger homes at current higher interest rates," said Robert Van Order, Freddie Mac's chief economist.

Refinancings this year have dropped to 25 percent of all loans originated -- half the number of last year.

Adjustable-rate mortgages rose in the third quarter to 30 percent of the market, a level at which they are expected to remain in 2000.

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