Fannie Nudges Up Origination Forecast

The secondary mortgage lender expects U.S. home-loan originations to total $496 billion in the third quarter then fall to $420 billion three months later.

But during the first-three months of 2017, Fannie sees an even bigger decline ahead — projecting that national loan production will be just $334 billion.

The predictions were made in the Washington-based firm’s Housing Forecast: August 2016.

In last month’s outlook, Fannie had originations falling from $500 billion this quarter to $412 billion in the fourth quarter and $333 billion in the first-quarter 2017.

The home-purchase financing forecast for the third quarter was trimmed to $294 billion
from $295 billion, while fourth-quarter purchase transactions are now expected to come in at $249 billion versus $250 billion previously expected.

Current-quarter refinance originations are projected to be $202 billion compared to $205 billion expected last month, and the fourth-quarter outlook grew to $171 billion from $162 billion.

Overall full-year mortgage originations are predicted to fall from $1.762 trillion in 2016 to $1.556 trillion next year.

That’s slightly more than in July, when production was expected to decline from $1.748 trillion to $1.550 trillion in 2017.

The 2016 purchase financing projection dipped to $1.014 trillion from $1.015 trillion in the prior forecast, while
next year’s expected purchase-money volume was shaved $0.002 trillion to $1.020 trillion.

But Fannie raised its outlook for this year’s refinances to $0.747 trillion from $0.733 trillion expected in July, while the 2017 refinance forecast grew to $0.536 trillion from $0.528 trillion.

Fannie was far less generous with its refinance outlook, however, than secondary-rival Freddie Mac — which earlier this week boosted its 2016 refinance forecast by $106 billion from July to $1.000 trillion and increased the 2017 refinance forecast by $98 billion to $0.594 trillion.