Fannie Mae cuts origination projection, forecasts recession in 2023 Fannie expects mortgage originations to total $2.8 trillion in 2022 and $2.4 trillion in 2023

Didier Malagies • April 21, 2022


Fannie Mae has lowered its mortgage origination forecasts for 2022 and 2023 due to the Federal Reserve’s (Fed) aggressive inflation-fighting monetary policy and corresponding volatility in the mortgage market.

Fannie’s Economic and Strategic Research (ESR) Group dropped its projected single-family mortgage origination volume for 2022 from $3 trillion to $2.8 trillion. It also downsized the 2023 forecast from $2.7 trillion to $2.4 trillion. To compare, in 2021, the total was $4.5 trillion. 


Higher interest rates reduce borrowers’ appetite for refinancing, which is expected to decline from 58% of the mix in 2021 to 32% this year. In volumes, it represents $889 billion and $558 billion, respectively. Fannie Mae estimates that with rates at 5%, only 2.3% of all outstanding loan balances have a refinance rate incentive of at least 50 basis points.


Purchases will also decline in a more challenging landscape, from $1.93 trillion in 2022 to $1.85 trillion in 2023, both downward revisions from Fannie’s last month’s forecast.


“Mortgage rates have ratcheted up dramatically over the past few months, and historically such large movements have ended with a housing slowdown. Consequently, we expect home sales, house prices, and mortgage volumes to cool over the next two years,” Doug Duncan, Fannie Mae senior vice president and chief economist, said in a statement. 


According to Duncan, households with a 30-year fixed mortgage rate of 3% are unlikely to give that up in favor of a rate closer to 5%, a “lock-in” effect that will weigh on home sales. 


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Fannie Mae expects a 7.4% decline in home sales for 2022, followed by a 9.7% reduction in 2023 – previously, it expected a 4.1% drop this year and 2.7% in the next year. The house prices growth forecast is at 10.8% in 2022 and 3.2% in 2023. 


Regarding the overall economy, the ESR Group downgraded the 2022 GDP forecast by 0.2 percentage points to 2.1%, as record-high job openings are bringing near-term resilience to the economy, despite higher interest rates and the impacts of the war in Ukraine. 


But, for 2023, the scenario is more challenging. Fannie Mae changed its GDP forecast from a growth of 2.2% to a decline of 0.1%. According to the agency, a “soft-landing” – when inflation subsides without economic contraction – is possible, but historically such an outcome is an exception, not a norm. 

Fannie’s predictions show that, after peaking at 8.5% in March, inflation may be reduced to 5.5% in the fourth quarter of 2022. The unemployment rate is expected to reach 6% at some point in 2024, a change similar in magnitude to the 1990 and 2001 recessions.


“Data from U.S. economic history suggest that successfully negotiating a ‘soft landing’ requires monetary tightening to be pre-emptive rather than responsive,” Duncan said. “As such, we’ve updated our 2023 forecast to include a modest recession, but one that we do not expect to be similar in magnitude or duration to the recession of 2008.”


According to Fannie Mae, the mortgage credit quality is far superior in the current period, the residential real estate and the mortgage finance system are less leveraged now, and servicers are better equipped to deal with delinquencies. 




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By Didier Malagies • June 12, 2025
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