A reduction in forecasted purchase financing this year was more than offset by an increase in expected refinances. But next year’s boosted refinance outlook wasn’t enough to cover the purchase cuts.
Primary home lenders are expected to originate $482 billion in single-family loans, including refinances and purchase financing, during the three months ended mid-year 2018.
Freddie Mac, which made the prediction in its May 2018 Economic & Housing Market Forecast, raised its expectations from last month’s outlook, when it projected $441 billion in second-quarter production.
The third-quarter forecast inched up to $480 billion from $478 billion, while expected originations during the final three months of this year were cut to $400 billion from $428 billion.
Based on refinance share predicted by Freddie, the second-quarter refinance projection was raised to $130 billion from $106 billion, while the following quarter’s outlook increased to $125 billion from $110 billion.
Current-quarter expected purchase-money volume was up to $352 billion from April’s projection of $335 billion. But the third-quarter purchase forecast was reduced to $355 billion from $368 billion.
Freddie raised its estimate of overall full-year 2017 originations to $1.865 trillion from $1.850 trillion. This year’s outlook is for $1.750 trillion versus the $1.720 trillion previously predicted. The 2019 forecast fell, though, to $1.744 trillion from $1.760 trillion.
Last year’s estimate of refinances rose to $0.671 trillion from $0.666 trillion in the prior report, and this year’s projection increased to $0.508 trillion from $0.447 trillion. The 2019 refinance outlook was up to $0.419 trillion from $0.405 trillion expected in the report from a month earlier.
The secondary lender has refinance share thinning from 29 percent in 2018
to 24 percent next year.
The origination of loans to finance a home purchase is estimated at $1.194 trillion in 2017, a little more than the $1.184 trillion previously estimated. This year’s purchase outlook was reduced to $1.243 trillion from $1.273 trillion predicted last month, and the 2019 forecast was cut to $1.325 trillion from $1.355 trillion.
Based on Freddie’s dollar amounts for FHA and VA originations, last year’s government share estimate is 23.0 percent, the same as expected for this year. The 2019 forecast is 22.8 percent.
