The outlook is for fundings to fall and refinances to retreat. But the share of adjustable-rate activity is anticipated to rise.
U.S. lenders will close $245 billion during the first quarter, sinking from the prior quarter’s $421 billion, Freddie Mac reported Monday in its Economic and Housing Market Outlook. Expected activity is also lower than the $335 billion originated during the first three months of last year.
The second quarter will see a slight recovery, with production projected at $275 billion. Loan volume will peak at $295 billion in the third quarter.
The origination of loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs will account for $70 billion of volume from January through March and $80 billion of the second quarter’s volume.
Around 5 percent of first-quarter fundings will be adjustable-rate mortgages, with the share inching up to 6 percent in the second quarter.
Refinances will account from 55 percent of the current period’s activity, a big decline from the 71 percent in the prior period, then tumble to 40 percent in the second quarter. Freddie has refinance share at 35 percent each quarter after that through the end of next year.
From Jan. 1 to Dec. 31, Freddie expects total U.S. originations to be $1.050 trillion, worse than last year’s $1.554 trillion. A marginal improvement to $1.150 trillion is expected next year.
