Mortgage Origination Outlook Cut, Biggest Hit to Refis

Residential loan originators are expected to close $328 billion during the second quarter then slow activity to $304 billion in the third quarter, Fourth-quarter production is projected at $263 billion.

The forecast was revised from the one made a month earlier, which had mortgage fundings falling from $355 billion to $333 billion in the third quarter and $295 billion in the fourth quarter.

The latest predictions were made in Fannie Mae’s Housing Forecast: April 2014.

Second-quarter refinance originations are now expected to come in at $125 billion versus the $143 projected last month. The third-quarter refinance outlook was cut to $96 billion from $118 billion.

Fannie lowered its forecast for second-quarter purchase financing to $202 billion from $212 billion, while the following quarter’s projection was lowered to $208 billion from $215 billion.

From Jan. 1, 2014, through Dec. 31, 2014, the Washington, D.C.-based company predicts volume will total $1.141 trillion. The full-year 2014 forecast was lowered from $1.209 trillion previously expected.

Next year’s projection fell to $1.132 trillion from $1.181 trillion.

The refinance outlook fell to $0.417 trillion for this year compared to $0.466 trillion in March’s forecast, while next year’s refinance projection was lowered to $0.303 trillion from $0.332 trillion.

Fannie has refinance share going from 37 percent in 2014 to 27 percent the following year.

The 2014 purchase forecast fell to $0.724 trillion from $0.744 trillion, and Fannie reduced next year’s purchase outlook to $0.829 trillion from $0.849 trillion.

Adjustable-rate mortgages are expected to make up 11 percent of residential originations this year and 16 percent of the 2015 total.

Fannie said that mortgage debt outstanding will climb from $9.940 trillion this year to $10.073 trillion in 2015.