Skip to Page Content | Skip to Site Navigation | Skip to Section Navigation

Freddie Mac December 2015 Insight & Outlook

MCLEAN, VA--(Marketwired - Dec 22, 2015) - Freddie Mac (OTCQB: FMCC) released today its monthly Insight & Outlook for December. This month's Insight examines the nascent but quickly-growing world of marketplace lending, while the Outlook reviews the likely impact on the housing market in 2016 of the Federal Reserve's long-awaited decision to raise short-term interest rates. A video preview, along with the complete monthly Insight & Outlook commentary is available here.

Insight Highlights 

  • The rapid growth of marketplace lending combined with its emphasis on Internet outreach and its novel underwriting practices have generated dramatic predictions of its future. 
  • PricewaterhouseCoopers LLP estimates that Peer-to-Peer originations totaled approximately $5.5 billion in 2014. They project the market could reach $150 billion by 2025. 
  • Unsecured consumer lending represents the dominant form of marketplace lending, followed by loans to small and medium businesses, and student loan refinances
  • Morgan Stanley estimates marketplace mortgage lending could total $14 billion by 2020, but this would still represent less than one percent of industry originations.

Outlook Highlights

  • Expect the 30-year fixed-rate mortgage to average below 4.5 percent for 2016 on an annualized basis.
  • Gradually higher mortgage interest rates will present an affordability challenge, but expect a strengthening labor market and pent-up demand to carry 2015's home sales momentum into 2016.
  • Expect house price growth to moderate a bit to 4.4 percent in 2016 driven in part by the reduction in homebuyer affordability and reduced demand as a result of Fed tightening.
  • Housing activity will grow in 2016 despite monetary tightening. Expect total housing starts to increase 16 percent year-over-year and total home sales to increase 3 percent.
  • While home purchases will increase next year, higher interest rates will reduce the refinance volume pushing overall mortgage originations lower in 2016 than in 2015.

Quote: Attributed to Sean Becketti, Chief Economist, Freddie Mac.

"It's too soon to tell whether marketplace lending is the next Uber or just another flash in the pan. The current generation of marketplace lenders all may fail in the next economic downturn. Regulators may impose higher standards on marketplace lenders. The cost advantages of marketplace lending may not extend to mortgage lending. But innovation is difficult to stop. New startups will look for ways to improve upon current marketplace lending business models. Large bank lenders may incorporate the most successful of the marketplace lending innovations. It's difficult to say where all this will lead, but one prediction is indisputable. Expect change."

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac's blog FreddieMac.com/blog.








 

The financial and other information contained in the documents that may be accessed on this page speaks only as of the date of those documents. The information could be out of date and no longer accurate. Freddie Mac does not undertake an obligation, and disclaims any duty, to update any of the information in those documents. Freddie Mac's future performance, including financial performance, is subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect the company's future results are discussed more fully in our reports filed with the SEC.


Print Email RSS            
         

Get RSS Feed

Sign Up For Email Alerts

Media Contact

For press inquiries only:

General
E-mail
(703) 903-3933

Non-press inquiries

Financial Results

CEO Don Layton discusses our third quarter 2016 financial results with the media.
Listen

Moving Housing Forward

See how our commitment to you and the nation is moving housing forward.

A Better Housing Finance System
housingfinance.jpg
We're leading the market with our innovative credit risk transfers.
Watch our video

Search News Room

Back to Top