The outlook for this year’s refinance volume has been increased at the expense of purchase production. Expectations for government share were lifted for 2013.
Estimated home loan originations during the first quarter of this year are $500 billion, including $395 billion in refinances and $105 billion in purchase financing.
While the overall first-quarter forecast was unchanged from last month’s outlook, the refinance projection increased from $385 billion estimated last month, and the purchase forecast was cut from $115 billion.
The figures were based on Freddie Mac’s May 2013 Economic and Housing Market Outlook. Purchase and refinance dollar amounts were derived using Freddie’s refinance share.
Total production is expected to increase to $530 billion this quarter then fall to $420 billion in the third quarter.
Refinances are predicted to tumble from $371 billion to $273 billion in the third quarter, and purchase originations are expected to decline from $159 billion in the second quarter to $147 billion.
Although Freddie raised estimated first-quarter refinance share to 79 percent from 77 percent in last month’s outlook, the projected second quarter share of 70 percent and the third-quarter share of nearly two-thirds were the same as in the previous forecast.
Government lending, which last month was estimated to account for 19.0 percent of first-quarter business, is now estimated at a 20.4 percent share. Second-quarter government share of 18.9 percent and third quarter share of 19.1 percent were both the same as projected last month.
Freddie has the share of adjustable-rate mortgages at 9 percent this quarter and rising 1 percentage point each quarter through the end of next year.
Full-year mortgage production is forecasted to fall from $1.8 trillion in 2013 to $1.3 trillion next year, the same as Freddie projected last month.
But the outlook for this year’s refinance production was raised to $1.242 trillion from $1.224 trillion, while the purchase outlook was lowered to $0.558 trillion from $0.572 trillion.
Next year, refinances and purchases are each expected to amount to $0.650 trillion, the same as predicted in April by Freddie.
The expected refinance share for 2013 inched up to 69 percent from 68 percent projected in April. There was no change in the 50 percent refinance share expected in 2014.
This year’s expected government share, meanwhile, increased to 19.28 percent from 18.89 percent projected last month, and next year’s expected share was unchanged at 19.23 percent.
Projected ARM share is 10 percent this year and 14 percent in 2014.
