The outlook for quarterly mortgage originations has diminished, and the forecast for next year’s government fundings was slashed. But the expected adjustable-rate share was boosted, while the projection for fixed rates was lowered.
Freddie Mac predicted in its September 2009 Economic and Housing Market Outlook that third-quarter residential originations will come in at $0.575 trillion, less than $0.625 trillion estimated for the second quarter but higher than $0.370 trillion a year earlier.
The latest outlook, released today, was $50 billion lower than Freddie’s projection last month.
Full-year production was estimated at $2.165 trillion, compared to $1.700 trillion estimated for last year and $2.020 projected for 2010. August’s outlook said Freddie expected volume of $2.300 trillion during 2009 and $2.270 trillion next year.
FHA and VA originations are expected to account for $0.115 trillion of third-quarter activity, lower than $0.125 trillion in the second quarter. In its prior outlook, Freddie projected $125 billion in third-quarter government production.
Government originations are projected to fall to $0.373 trillion next year from $426 trillion in 2009. Last month, Freddie predicted government volume would climb to $0.440 trillion in 2010 from $0.436 trillion this year.
Adjustable-rate mortgages are expected to account for 4 percent of third-quarter originations, climbing from 3 percent in the prior period. But projected ARM share is just half its level a year earlier. The previous outlook indicated third-quarter ARM share was expected to be only 2 percent.
ARM applications represented 5.6 percent of applications tracked in the latest Mortgage Bankers Association weekly survey.
Refinance share of applications was forecasted by Freddie at 55 percent for the current quarter, lower than 70 percent in the second quarter but above 39 percent last year. MBA’s survey indicated refinance share was 57 percent last week.
Freddie projected that the 30-year fixed-rate mortgage will edge up to 5.2 percent in the third quarter from 5.0 percent last quarter. Last month, Freddie projected the 30-year would be 5.3 percent.
The 30-year averaged 5.08 percent in Freddie’s weekly rate survey yesterday.
