Despite a recent surge in mortgage rates, economists at the Federal National Mortgage Association have boosted their forecast for originations by $100 billion.
Residential lending activity — including purchase financing and refinancing — during the final-three months of this year is expected to come in at $470 billion.
Business is then expected to decline to $358 billion in the first quarter of next year. But a bounce up will have second-quarter originations reaching $438 billion.
Fannie Mae made those predictions in its
Housing Forecast: November 2016.
The secondary lender raised its expectations from October, when national production was expected to fall from $459 billion to
$343 billion in the first-quarter 2017 then climb to $424 billion.
Fannie lifted its fourth-quarter 2016 purchase-money forecast
to $250 billion from $247 billion last month, while the following period’s outlook rose to $190 billion from $179 billion.
The current-quarter refinance outlook
increased to $220 billion from $211 billion, and the first-quarter 2017 refinance projection was lifted to $169 billion from $164 billion.
Overall originations are expected to be $1.875 trillion this year, more than $1.832 trillion in the October forecast. The 2017 outlook expanded to $1.607 trillion from $1.550 trillion. In 2018, mortgage bankers are expected to generate $1.538 trillion in total production.
The improved expectations from the Washington-based organization came
despite that average 30-year fixed rates have spiked from just 3.42 percent in the week ended Oct. 6 to 3.94 percent in the week ended Nov. 17, according to Freddie Mac.
Even Fannie expects next year’s 30-year fixed rates to average 10 basis points more in 2017 than it predicted last month.
Fannie increased its 2016 purchase financing outlook to $1.015 trillion from
$1.012 trillion in the last report, and the 2017 forecast was lifted to $1.054 trillion from $1.002 trillion. The following year, $1.152 trillion in purchase financing is predicted.
Refinance originations are expected to fall from $0.860 trillion this year to $0.553 trillion next year, down from the last forecast when volume was projected to fall from $0.820 trillion to $0.548 trillion. The 2018 outlook is for only $0.386 trillion in refinances.
Refinance share is expected to diminish from 46 percent in 2016 to 34 percent the following year and 25 percent in 2018.
