The latest mortgage outlook has mortgages outstanding falling by nearly $500 billion during the next two years. The share of adjustable-rate mortgages is projected to jump, while refinance share is headed lower. A peak in production is predicted for the current quarter.
Fourth-quarter originations by U.S. residential lenders will be $483 billion, according to Fannie Mae’s monthly economic outlook. Production is expected to leap from $363 billion estimated for the third quarter then fall to $328 billion during the first quarter of next year.
The latest fourth-quarter forecast was a hair under last month’s $484 billion prediction from the Washington, D.C.-based firm.
For this entire year, Fannie expects originations to add up to $1.497 trillion, a big drop from last year’s $1.917 trillion but still better than the $1.208 trillion in projected production next year.
Fourth-quarter refinance share is estimated at 76 percent, jumping from the third quarter’s 64 percent. During the first three months of next year, Fannie has refinance share at just over two-thirds of originations.
Based on loan applications, around 6 percent of fourth-quarter activity is expected to be for ARMs, the same as during the second and third quarters. ARM share is expected to elevate to 10 percent by the end of 2011.
Mortgages outstanding are predicted to fall from the third quarter’s $10.576 trillion to $10.526 trillion in the fourth quarter. Fannie has the nation’s collective mortgage portfolio falling to $10.084 trillion by the end of 2012.
First mortgages accounted for $9.541 trillion of the fourth-quarter 2010 figure.
