Freddie Mac released monthly its October economic report last week and revised its September projections upwards in several important categories.

While the corporation projects a continued gradual increase in interest rates, it has adjusted 30 year fixed rates for 2005 downward to 6.1% in the fourth quarter of 2005, 10 basis points lower than its September projections. This lowered interest rate outlook fuels its other changes since last month.

Based on September data, total home sales were projected at 7.66 million units in 2004 and 7.15 million in 2005. New figures are 7.7 for this year (6.5 million existing and 1.2 million new home sales) and 7.67 million for 2005, an increase of over 7% from September projections and only a slight dip from the record setting sale pace of 2004.

Mortgage originations are expected to be even stronger than anticipated in September with total originations anticipated to total $2.7 trillion in 2004 (the September figure was $2.63 trillion) and $2.4 trillion in 2005 ($2.2 trillion). The portion of this figure attributed to refinancing has also been increased due to the slower increase in interest rates. September figures were 45% (2004) and 36% (2005). October projections are 46% and 40% respectively.