An upward revision in estimated first-half 2012 originations and an improved outlook for the second half came together to boost annual expected production by $100 billion. It will be the strongest annual originations in five years. While the forecast for purchase and refinance transactions was lifted, government-insured originations missed out on the increase.
Third-quarter home-loan production at U.S. lenders is expected to rise to $490 billion from $450 billion during the three months ended June 30. Last month’s outlook was for volume to rise to $450 billion from $430 billion.
The latest prediction has fourth-quarter activity at $390 billion.
Freddie Mac, which made the forecast in its September 2012 Economic and Housing Market Outlook, increased projected third-quarter refinance volume to $353 billion from the $324 billion forecasted last month, while the fourth-quarter refinance prediction was raised to $273 billion from $252 billion.
Third-quarter refinance share of 72 percent is expected to drop to 70 percent in the final quarter of 2012.
Purchase production, which is now projected to fall from $137 billion in the third quarter to $117 billion in the fourth quarter, was previously forecasted to fall from $126 to $108 billion.
The origination of loans insured by the Federal Housing Administration is expected to be $108 billion in the third quarter versus the $114 billion predicted last month. But the fourth-quarter outlook made up the difference, with Freddie raising projected FHA production to $89 billion from $83 billion.
By the time 2012 ends, Freddie estimates that residential originations will total $1.750 trillion, more than the $1.650 trillion projected a month earlier and the highest level since $2.432 trillion in 2007. The improvement reflected an increase in expected refinance originations to $1.278 trillion from $1.205 trillion and purchase production that is now expected to come in at $0.473 trillion versus $0.446 trillion.
Next year’s total forecasted fundings were left at $1.3 trillion, and 2014 total production is estimated to fall to $1 trillion.
