Fannie Mae cut its estimate of second-quarter originations by over $50 billion but more than made up for it with an improved outlook for the second half. The projection for purchase production was scaled way back as expectations for refinances have improved dramatically.
The Washington, D.C.-based company reported in its August housing forecast that its estimate of second-quarter residential originations is now $288 billion. A month ago, Fannie estimated that $341 billion was closed during the period.
Earlier this month, Mortgage Daily estimated that volume during the period between April 1 and June 30 amounted to $260 billion.
But while Fannie was cutting its second-quarter estimate, the forecast for the second-half was raised.
The projection for third-quarter production was increased to $301 billion from $237 billion predicted last month, while the fourth-quarter outlook was raised to $195 billion from $181 billion.
All of the second-half improvement was in refinance business. The government-controlled enterprise predicted that refinance volume will now come in at $194 billion in the third quarter versus just $93 billion forecasted last month. Fourth-quarter refinance projections were raised to $107 billion from $65 billion.
Refinance share is expected to inch up to 64 percent this quarter from 62 percent in the first-three months of 2010 then fall to 55 percent in the fourth quarter. Refinance share will retreat to just a quarter by the third period of 2012.
But the projection for purchase originations was slashed to $107 billion in the third quarter from $145 billion, and the fourth-quarter outlook was cut to $87 billion from last month’s forecast of $116 billion.
For all of 2011, Fannie expects overall fundings to fall to $1.094 trillion from $1.512 trillion last year. Next year’s production is predicted to come in at $0.935 trillion, while activity is expected to rise to $1.156 billion in 2013.
Total home loans outstanding will be $10.368 trillion this quarter then fall to $10.243 trillion by the end of this year. Fannie expects liquidation of the nation’s mortgage portfolio to continue unabated through at least 2013 — when the total falls below $10 trillion. Outstandings were estimated at $10.400 trillion as of the second quarter.
First liens accounted for $9.474 trillion of the projected third-quarter outstandings, down from $9.491 trillion in the second quarter.
