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WASHINGTON - Mortgage rates are expected to decline to 6.4% by the end of 2025 and further decrease to 5.9% by the end of 2026, according to the September 2025 Economic and Housing Outlook released Tuesday by Fannie Mae’s (OTCQB:FNMA) Economic and Strategic Research Group. The government-sponsored enterprise, with a market capitalization of $72 billion and annual revenue of $28.9 billion, has seen its stock surge over 280% year-to-date despite volatile market conditions.
The forecast projects combined new and existing home sales to reach 4.72 million units in 2025, rising to 5.16 million in 2026. Single-family mortgage originations are anticipated to total $1.85 trillion in 2025 before increasing to $2.32 trillion in 2026.
The report indicates that refinancing activity is expected to grow as mortgage rates decline, with the refinance share of mortgage originations projected to increase from 26% in 2025 to 35% in 2026.
The outlook, which includes economic developments commentary alongside economic and housing forecasts, is based on various assumptions and subject to change, according to the press release statement.
Fannie Mae’s Economic and Strategic Research Group, led by Chief Economist Mark Palim, analyzes current and historical data, emerging trends, and conducts industry surveys to develop its forecasts on the economy, housing, and mortgage markets.
In other recent news, Fannie Mae has begun marketing a $560.5 million reperforming loan sale, which includes approximately 3,058 loans. This move is part of the company’s efforts to reduce the size of its retained mortgage portfolio. In another development, Fannie Mae has revised its 2025 home sales forecast downward, now expecting 4.14 million existing single-family home sales, a decrease from the earlier estimate of 4.24 million units. This adjustment is attributed to updated interest rate expectations, with mortgage rates projected to be 6.5% by the end of 2025 and 6.1% by the end of 2026.
Additionally, Deutsche Bank has initiated coverage on Fannie Mae with a Buy rating and a price target of $20.00, indicating confidence in the stock’s potential upside. In contrast, B.Riley has initiated coverage with a Neutral rating and a $10.00 price target, highlighting the ongoing conservatorship of Fannie Mae since the 2008 financial crisis. These recent developments reflect varying perspectives from financial analysts on Fannie Mae’s current and future positioning in the market.
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