The latest outlook from the Mortgage Bankers Association has quarterly mortgage originations tumbling. But the outlook conflicts with recent reports from major mortgage lenders and the latest forecasts from Fannie Mae and Freddie Mac.
Fourth-quarter residential production by U.S. lenders will be $248 billion, according to the Mortgage Bankers Association’s mortgage finance forecast. The projection is a big drop from $399 billion estimated in third-quarter activity.
MBA cut its fourth-quarter forecast from the prior outlook when $262 billion was projected.
In the first quarter of 2011, MBA sees aggregate production coming in at $244 billion.
MBA’s forecast seems to be out of sync with actual market conditions. Most of the big lenders have reported that third-quarter production exceeded second-quarter activity, while MBA is reports a 3 percent decline between the two periods.
In addition, most mortgage bankers have reported that their application pipelines in the third quarter jumped from second-quarter applications — suggesting that MBA’s $244 billion estimate in fourth-quarter volume falls far short of where actual volume will come in.
Over at Freddie, the latest forecast has fourth-quarter originations at $400 billion, while Fannie forecasted $483 billion.
For all of 2010, MBA forecasts $1.401 trillion in U.S. mortgage production then falling to $0.996 trillion next year. Volume is expected to climb back to $1.187 trillion in 2012.
Refinances are expected to account for 63 percent of the current quarter’s activity, down from 74 percent in the third quarter. In the first three months of next year, the share is projected to fall to just over half.
MBA has the share of loans that will be adjustable-rate at 6 percent in the fourth quarter, the same as the prior and subsequent quarters.
