Economists at the Federal Home Mortgage Corp. have increased the volume of mortgage originations expected for this year and next year.
During just the final quarter of this year, Freddie Mac predicts that residential originations from all U.S. lenders will total $280. Volume is forecasted to also be $280 billion in the first three months of next year then jump to $350 billion in the second quarter.
The fourth-quarter 2014 outlook increased from $260 billion predicted last month, while the first-quarter 2015 forecast expanded from $265 billion and the second-quarter projection was up from $340 billion.
Based on Freddie’s expected refinance share, the current quarter’s refinance origination forecast was lifted to $112 billion from $91 billion last month. The first-quarter 2015 refinance outlook expanded to $98 billion from $93 billion.
On the purchase side, production is projected to go from $168 billion in the fourth quarter to $182 billion in the first three months of 2015. Freddie trimmed its fourth-quarter purchase financing outlook from $169 billion expected last month, while the following quarter’s forecast was lifted from $172 billion.
Freddie increased its full-year 2014 estimate for overall originations to $1.200 trillion from $1.150 trillion expected in the prior outlook. The 2015 forecast increased to $1.100 trillion from $1.050 trillion.
Freddie added 2016 to its forecast, with volume expected to reach $1.175 trillion that year.
The 2013 refinance estimate was lowered to $1.136 trillion from $1.174 trillion in last month’s outlook. The 2014 refinance forecast increased to $0.516 trillion from $0.483 trillion, but next year’s outlook was cut to $0.253 trillion from $0.273 trillion.
Refinance share is expected to tumble from 59 percent last year to 43 percent this year then fall to 23 percent next year. In 2016, refinance share is expected to be just 15 percent.
Freddie also increased estimated purchase financing activity to $0.789 trillion for 2013 from $0.751 trillion estimated last month. This year’s purchase forecast rose to $0.684 trillion from $0.667 trillion, and the 2015 number climbed to $0.847 trillion from $0.777 trillion.
Freddie has 2016 purchase production at $0.999 trillion.
The origination of loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs is expected to amount to $0.243 trillion this year, $0.220 trillion in 2015 and $0.247 trillion the following year.
