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Solid 2005 Originations Won’t Hold in ’06

Solid 2005 Originations Won’t Hold in ’06

Fannie Mae releases mortgage market report

December 22, 2005


photo of Coco Salazar
Mortgage debt grew at the fastest pace in a quarter century because of robust home equity lending and record home sales.

Single-family mortgage debt outstanding surged in the third quarter at a 15.9 percent compound annual rate, while in the second quarter it was 15.0 percent, according to Fannie Mae’s latest Economic and Mortgage Market Developments report.

The combined 15 percent annualized growth rate in mortgage debt outstanding for the second and third quarter “was the fastest two-quarter increase since 1979,” said David Berson, Fannie chief economist, in the report.

Berson attributed the rapid rise to record home sales and double-digit home price appreciation, as well as growth in home equity loans — which respectively climbed 24.0 and 16.2 percent in the second and third quarters, although down from a year earlier when it was 36 percent. He also noted cashout-refinance activity continued to be strong.

The midyear increase lead Fannie to raise its estimate of single-family mortgage debt outstanding growth for 2005 to 12.9 percent, the report said.

The Office of Federal Housing and Enterprise Oversight recently reported 2004 residential mortgage debt outstanding grew by 13.4 percent to $8.7 trillion — the highest annual growth rate in 18 years.

Home equity in owner-occupied housing reportedly rose to a record $10.3 trillion in the last three-month period.

Berson noted that Fannie raised its estimate of total originations for this year to $2.83 trillion — the second best year.

For 2006, the economist sees the slowdown in home sales and home price appreciation dipping purchase originations to 1.45 trillion, and higher mortgage rates decreasing refinances to nearly $0.7 trillion — reducing overall mortgage originations about 26 percent annually.

Coco Salazar is an assistant editor and staff writer for

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