Refinances are forecasted to account for a diminishing share of business next year, dragging down annual government originations by $22 billion and pulling down conventional volume by $176 billion.
During 2010, residential lenders are forecasted to fund $1.498 trillion, according to Freddie Mac’s November forecast. This year’s expected level of activity is a drop of more than a quarter from an estimated $2.000 trillion in U.S. production last year.
Home loan closings are predicted decline further next year — to $1.300 trillion.
The production of loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs is expected to account for $0.372 trillion of this year’s production — lower than $0.451 trillion during 2009 but higher than next year’s projection of $0.350 trillion.
During just the fourth quarter, Freddie predicts total residential originations will rise to $400 billion from the third quarter’s $399 billion. But business is expected to fall 25 percent in the first three months of next year.
The share of refinance traffic is expected to drop from an estimated 70 percent in the third quarter to just under two-thirds during the current period. By the end of 2011, refinance share is projected to plummet to a little more than a third.
