This month’s forecast for quarterly home-loan originations was reduced by $100 billion from last month’s outlook. Adjustable-rate loans are predicted to make up a growing share of fundings, and government business is on a roller coaster.
In its July 2010 Economic and Housing Market Outlook, Freddie Mac projected second-quarter residential originations will come in at $344 billion. The level of projected quarterly activity sank from the $444 billion estimated last month.
The latest second-quarter forecast was still higher than the $342 billion in estimated first-quarter production. Third-quarter volume is expected to rise to $369 billion.
Conventional originations are expected to come in at $255 billion this quarter then rise to $269 billion during the next period. Conventional business totaled $250 billion in the first quarter.
But FHA production is forecasted to fall to $89 billion from the first quarter’s $92 billion then jump to $100 billion in the third quarter.
During all of 2010, Freddie predicts residential fundings will be $1.400 trillion, sinking from last year’s $2.000 trillion. Next year, $1.400 trillion is also projected.
The refinance share of originations is pegged at 69 percent in the second quarter and 64 percent in the current quarter. The share was 73 percent in the first quarter.
Adjustable-rate mortgages are expected to make up just 4 percent of second-quarter applications, the same as the prior quarter. But ARM share will increase by 1 percent each quarter until the final period of next year — when it is projected to reach 10 percent.
