Outlook Highlights

• Domestic aggregate demand (consumers and businesses), rose 3.6 percent annualized during the third quarter, the second biggest quarterly gain in five years.
• Non-residential fixed investment (buildings, equipment and software) expanded at a striking 14 percent pace during the third quarter; residential investment also rose a little bit for the second straight quarter.
• The Freddie Mac House Price Index for the U.S. has recorded a 25 percent cumulative decline since the peak in mid-2006 through September 2011. 
• Ten-year Treasury yields continue to hover in a narrow band around 2.0 percent, while 30-year conforming fixed-rate mortgages have averaged about 4.0 percent in recent weeks.
• The effect of the extended and enhanced HARP on single-family originations, assuming about $200,000 loan amount on average, is likely to be around $200 billion to $300 billion over 2012 and 2013, with most of the additional volume falling in the first year.

Click here to view the complete November 2011 U.S. Economic and Housing Market Outlook. Freddie Mac compiles data on major economic and housing and mortgage market indicators and offers forecasts based on those indicators.

Quotes

Attributed to Frank Nothaft, Freddie Mac, vice president and chief economist.

• "Allowing eligible borrowers to refinance (who otherwise may face a limited opportunity to refinance without paying down a significant chunk of their loan principal) and obtain substantially lower interest rates and monthly payments, will likely reduce defaults, ease distressed sales in markets, and provide needed cash flow to borrowers. This latter effect can, in turn, support additional consumption spending and be beneficial for economic growth in the long run. As an example of the potential amount of payment reduction, borrowers who refinanced during the third quarter (both HARP and outside of HARP) and were funded by Freddie Mac will save about $2,500 in interest payments in the first 12 months after their refinance."