The latest economic forecast for real estate finance has residential loan originations declining for three consecutive quarters a total of 38 percent.
Home lending activity amounted to an estimated $400 billion in the second quarter. Business is expected to fall to $330 billion in the current quarter and $270 billion in the fourth quarter.
In fact, residential loan production by all U.S. lenders is projected to decline each quarter through the first quarter of next year.
The outlook was reported by Freddie Mac in its July 2015 Economic and Housing Market Outlook. The secondary lender made no changes from its last economic forecast in June.
Based on Freddie’s projected refinance share, refinance originations are expected to fall from $180 billion in the second quarter to $116 billion three months later then finish out the fourth quarter at just $92 billion.
Freddie has purchase financing falling from $220 billion to $215 billion in the third quarter and $178 billion in the final quarter of 2015.
For all of 2015, total mortgage production is predicted to reach $1.350 trillion then drop to $1.275 trillion next year.
Refinance share is expected to fall from 43 percent this year to 30 percent in 2016, putting refinance originations at $0.581 trillion in 2015 and $0.383 trillion next year.
Purchase financing, however, is forecasted to increase from $0.770 trillion this year to $0.893 trillion in 2016.
Based on Freddie’s projection of originations insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs, government share of mortgage originations is expected to slip from 20.4 percent in 2015 to 20.0 percent next year.
Freddie has adjustable-rate mortgage share soaring from eight percent this year to 15 percent in 2016.
