The latest economic forecast from the Federal Home Loan Mortgage Corp. has a lower outlook for the nation’s home purchase financing this year. However, an increase in expected refinances will make up the difference.
In its July 2013 Economic and Housing Market Outlook, Freddie Mac predicts that overall mortgage originations will go from $560 billion in the second quarter to $400 billion then settle at $300 billion in the final quarter. There was no change from last month’s outlook.
Based on Freddie’s overall projection and refinance share, the second-quarter refinance outlook was raised to $392 billion from $364 billion. The third-quarter projection was lowered to $200 billion from $220 billion and fourth-quarter refinances are expected to come in at $120 billion versus the $135 billion forecasted last month.
Refinance share is expected to fall from the second quarter’s 70 percent to half then drop to 40 percent in the final three months of 2013.
The prediction for second-quarter purchase financing was cut to $168 billion from $196 billion. But the third-quarter outlook was increased to $200 billion from $180 billion, and fourth-quarter purchase production is now expected to reach $180 billion instead of the $165 billion predicted in the June report.
Government mortgage production is projected to fall from $105 billion to $80 billion then decline to $65 billion in the fourth quarter — the same as was forecasted in the previous outlook.
Total home loan originations for all of 2013 are expected to be $1.800 trillion, the same as expected last month. Next year’s forecast was also unchanged at $1.300 trillion.
The refinance portion of this year’s forecast is 62 percent, or $1.116 trillion. Next year’s refinance share is 40 percent, or $0.520 trillion. The 2013 refinance outlook was raised from 60 percent, or $1.080 trillion, projected last month, while there was no change in the 2014 forecast.
The 2013 purchase outlook was cut to $0.684 trillion from $0.720 trillion, and the 2014 outlook was unchanged at $0.780 trillion.
The $0.350 trillion in expected 2013 government production and the $0.250 trillion predicted for 2014 was the same as was forecasted in June.
