The outlook for quarterly U.S. home loan production has weakened, though the forecast improved for loans insured by the Federal Housing Administration.
Residential loan originations fell from an estimated $585 billion during the second quarter to $510 billion in the third quarter, according to Freddie Mac’s November 2009 Economic and Housing Market Outlook released today. Fourth-quarter production is pegged at just $455 billion.
Last month, Freddie projected fourth-quarter fundings would reach $514 billion.
Full-year originations are projected to climb from $1.650 trillion last year to $2.000 trillion this year then ease to $1.950 trillion during 2010.
Government mortgage fundings are expected to decline to $117 billion during the current quarter from the third quarter’s $125 billion. That outlook, however, is better than the $104 billion in fourth-quarter government originations projected last month.
Government activity for all of 2009 is expected to reach $463 billion, rising from $290 billion last year. During 2010, government production is projected to come in at $454 billion.
The outlook for conventional business, however, worsened from last month — when conventional volume was expected to fall to $410 billion in the fourth quarter from the third quarter’s $460 billion. This latest forecast is for conventional originations to drop to $338 billion from $385 billion in the third quarter.
Refinances are expected to account for nearly two-thirds of fourth-quarter applications, higher than 59 percent in the third quarter. Last month’s projection was for a 57 percent fourth-quarter refinance share. In last week’s Mortgage Bankers Association’s Weekly Mortgage Applications Survey, refinances represented two-thirds of activity.
Adjustable-rate mortgage share was projected by Freddie to remain at 4 percent, while MBA’s latest survey had ARM share at over 6 percent.
