The recent decline in interest rates has pushed up the refinance forecast for this year and next year by more than $150 billion. Even last year’s estimate increased.
During just the first quarter of this year, residential loan originations — including refinances and purchase financing — are expected to come in at $323 billion.
U.S. mortgage production is then expected to jump to $411 billion in the second quarter and settle back to $404 billion during the following three-month period.
Those predictions were made by Fannie Mae in its Housing Forecast: February 2016.
The current quarter’s outlook improved from $300 billion forecasted last month, while the second-quarter projection was up from $377 billion and the third-quarter prediction grew from $372 billion.
Fannie’s projection for first-quarter
purchase financing inched up to $174 billion from $170 billion in the last outlook, while the following quarter’s expected purchase volume moved up slightly to $266 billion from $264 billion.
The boost to Fannie’s refinance forecast was far more substantial — with the secondary lender now expecting $149 billion in first-quarter refinances versus the $129 billion expected last month. The second-quarter refinance outlook increased to $145 billion from $113 billion.
Full-year 2015 overall originations are now estimated at $1.690 trillion compared to the $1.673 trillion estimated in the last report.
This year’s total origination forecast jumped to $1.508 trillion from $1.396 trillion,
and next year’s projection grew to $1.438 trillion from $1.397 trillion.
The purchase portion of last year’s estimate crept up to $0.896 trillion from $0.895 trillion in the last forecast. The 2016 outlook for purchase financing is $0.950 trillion, up from $0.946 trillion.
But the 2017 purchase financing forecast was trimmed to $0.998 trillion from $1.003 trillion expected in January.
Refinances for 2015 are estimated at $0.795 trillion, more than the $0.778 trillion estimated last month.
The current-year refinance forecast climbed to $0.558 trillion from $0.450 trillion one month earlier, and the 2017 outlook increased to $0.440 trillion from $0.393 trillion.
Refinance share is expected to go from 47 percent last year to 37 percent in 2016 and 31 percent in 2017.
