Mortgage giant Freddie Mac has released its monthly forecast, showing less confidence in the U.S. mortgage market now than it did last month. The forecast from the company’s Office of the Chief Economist lowered expectations on almost all aspects of the housing sector following a month of more economic turmoil.

Freddie Mac now believes that mortgage demand will not rebound until 2010. The forecast predicted that mortgage originations were likely to fall by 8 percent to $1.65 million in 2009 before expanding to $1.82 trillion the following year. In October, Freddie believed that mortgage originations would increase to $1.92 trillion in 2009 and grow to $2.04 trillion in 2010.

The forecast also showed lowered estimates of home sales in 2009. Freddie Mac had previously projected home sales hitting 4.86 million in 2008 and rising to 5.13 million next year, but new data suggest that while there may be more home sales this year, no more than 5 million sales are likely for 2009.

Similarly, home prices are now expected to suffer more next year as well. As of last month, Freddie Mac expected the Standard & Poor’s Case-Shiller national home price index to fall by 13 percent in 2008, by 5.1 percent in 2009, and by 2 percent in 2010. The new predictions are that the indexed prices will drop by 13.9 percent this year, by 7.8 percent next year, and still fall 2 percent in 2010.

Exacerbating the housing downturn will be rising interest rates. Freddie Mac forecasts that rates on 30-year fixed rate home loans will average 6.1 percent this year and grow to 6.3 percent over the next two years. Last month, the company predicted that interest rates would drop to 5.9 percent in 2009 before rising to 6.2 percent in 2010.

All of these predictions were fueled by weaker employment and economic data. Freddie Mac predicts that unemployment will swell to 7.5 percent in 2009 while the gross domestic product (GDP) will only grow by 1.3 percent during the same year.