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Fannie Mae once again dropped its economic growth outlook amid global supply constraints, rising inflation and consumer-spending concerns.

This is the third consecutive month that Fannie Mae’s Economic and Strategic Research (ESR) group lowered its economic forecast for 2021 real gross domestic product (GDP). In September, Fannie Mae estimated GDP to be 5.4% annually in 2021, but it lowered it to 4.9% in October.

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“While we still see supply chain disruptions and, to a lesser extent, labor market tightness largely transitory, we now expect both to last longer than previously thought – and the Federal Reserve estimates is likely to last longer than that,” he said. Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.

“Combined with our expectation that inflation over the forecast horizon will run above the target, we expect increasing uproar from market participants for the Fed to tighten monetary policy: first by reducing asset purchases and then, by the fourth of 2022. In the quarter, the federal funds rate target range increased for the first time since December 2018,” Duncan said.

If the Federal Reserve begins to tighten monetary policy, interest rates will start rising. You can save money on your monthly mortgage payment through refinancing. Visit Trusted to enter your information And find your personal mortgage interest rate without affecting your credit score.

Inflation not temporary, says MBA economist: Here’s what it means for interest rates

Inflation hasn’t come down

inflation is now growing at record rates, recently rose 5.4% to a 13-year high. But Fannie Mae increased its forecast for inflation this year, saying it can’t be used to go up. ESR Group raised its forecast for overall 2021 inflation growth to 5.7% from 5.4% of the previous Consumer Price Index (CPI).

But Fannie Mae expects the Federal Reserve to begin tapering off this high inflation level. It said the central bank would begin reducing its asset purchases by the end of 2021 and could raise the federal funds rate in the fourth quarter of 2022. Said other economists, such as Mike Fratantoni, chief economist of the Mortgage Bankers Association (MBA). next rate hike It is possible As early as the third quarter of 2022.

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Inflation hits highest rate in 13 years – here’s what it means for interest rates

Fannie Mae raises its interest rate forecast

Due to supply-chain disruptions, the United States’ recovery from the coronavirus pandemic, inflation and economic growth amid a change in the Fed’s monetary policy, Fannie Mae is raising next year’s mortgage rate predictions. ESR Group now predicts that interest rates will rise to 3.3% in 2022, compared to its previous mortgage rate of 3.1%.

For home buyers This could mean that they may face less competition in the housing market. Fannie Mae said it expects the rate of growth in home prices to slow down next year, but it raised its overall growth forecasts for real estate prices. For this year, Fannie Mae increased its projection by 1.8 percentage points to say that home prices would rise 16.6% in 2021, and it raised its predictions for the next year by 2.3 percentage points to 7.4% in home values. increased of.

Fannie Mae said the increase in home price growth in its economic outlook is due in large part to continued tight housing inventory levels. If you are interested in buying a home because competition is slow, Visit Credible to Prequalify in Minutes without affecting your credit score.

FHFA expands mortgage refinancing opportunities for low- and middle-income families

“Even modest tightening of monetary policy will impact housing, but we expect the impact to be substantially reduced given current market conditions,” Duncan said. “Mortgage rates may rise in response to a harsh environment, but we expect the severe shortage of homes for sale to remain the primary driver of strong home price increases through at least 2022, increasing home sales and will limit the effect of interest rates on home prices.

“Right now, we anticipate mortgage rates to average 3.3% in 2022, which is slightly higher than 2020 and 2021, well below historical standards and supporting mortgage demand and affordability.”

in present, latest data Freddie Mac shows that the average 30-year mortgage rate is 3.05%. If you are interested in taking out a mortgage or a mortgage refinance, Get in touch with a trusted Home Loan expert to talk to And get all your questions answered.

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