Thanks to another improvement in expected refinance originations, the forecast for overall residential production has been raised by nearly $100 billion for 2012. The improved outlook has this year’s business up 12 percent over 2011.
Home-loan production by all U.S. lenders is expected to total $371 billion during the third quarter, nearly the same as the estimated $372 billion originated in the second quarter. Fourth-quarter fundings are projected to fall to $302 billion.
Last month, the forecast was for third-quarter residential originations of $324 billion and fourth-quarter volume of just $261 billion.
The improvement in the Mortgage Bankers Association’s outlook was primarily concentrated in refinance activity, which is now expected to total $275 billion in the third quarter versus the $230 billion predicted last month. The fourth-quarter refinance forecast was raised to $196 billion from $154 billion.
Expected refinance share was also lifted, to 74 percent this quarter from the 71 percent forecasted a month earlier. The fourth-quarter share was increased to nearly two thirds from 59 percent.
The improved third-quarter outlook bled over into purchase financing, which MBA now predicts will reach $96 billion compared to the $94 billion forecasted in the prior report. But the fourth-quarter purchase projection slipped to $106 billion from $107 billion.
Adjustable-rate mortgages are expected to account for 6 percent of overall production each quarter from the third-quarter 2012 through the first quarter of next year.
Improved refinance activity pushed the full-year forecast of total originations to $1.408 trillion from last month’s projection of $1.320 trillion. Even 2013 originations were lifted — to $1.043 trillion from $1.041 trillion.
Last year, mortgage bankers generated $1.262 trillion in home-loan production, according to MBA’s data.
Refinances are expected to represent $1.018 trillion of the 2012 total and $0.412 trillion of next year’s production, while purchase financing is forecasted to come in at $0.390 trillion this year and $0.631 trillion next year.
