Freddie Mac raised its expectations for first-half 2015 refinance originations and lifted its estimate for the final quarter of last year. The first-half forecast for purchase financing, however, was cut.
Residential loan originations by all U.S. lenders was $330 billion during the first three months of this year, the same as it was during the final three months of last year.
Production is then projected to rise to $390 billion in the second quarter and retreat to $325 the following three months.
Freddie’s
April 2015 Economic and Housing Market Outlook increased the fourth-quarter 2014 estimate from $280 estimated in the previous outlook.
Based on refinance share predicted by Freddie, refinance volume is expected to fall from $178 billion in the first quarter to $168 billion during the current quarter then drop to $104 billion in the third quarter.
The prior forecast had refinances retreating from $166 billion to $143 billion in the second quarter and $120 billion three months later.
Purchase financing, based on an analysis of Freddie’s forecast, will jump from $152 billion in the first three months of the year to $222 billion then dip back to $221 billion in the third quarter. Freddie cut its first-half purchase outlook from $412 billion expected last month but raised its third-quarter forecast from $205 billion previously projected.
Full-year total originations are expected to increase from $1.250 trillion last year to $1.300 trillion this year and slip back to $1.275 trillion in 2016. Freddie lifted its 2014 estimate from $1.200 trillion predicted last month.
Refinance production is forecasted to slip from $0.538 trillion in 2014 to $0.533 trillion this year and fall to $0.383 trillion in 2016. Previously, Freddie had refinancing going from $0.516 trillion last year to $0.520 trillion in 2015.
Refinance share is 41 percent this year and 30 percent in 2016.
Purchase financing is expected to grow from $0.713 trillion last year to $0.767 trillion in 2015 and $0.893 trillion next year. Freddie increased its 2014 estimate from $0.684 trillion expected in the previous outlook but lowered the 2015 forecast from $0.780 trillion.
The share of loans that are either insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs fell from 20.7 percent in 2014 to an expected 20.0 percent this year and next year.
Freddie has ARM share at 8 percent this year and 15 percent in 2016.
