Freddie Mac lowered its expectations for this year’s refinance production but raised its forecast for next year’s and 2016’s refinances. It did the exact opposite for its purchase financing outlook.
Total residential originations by all U.S. lenders are projected to be $280 billion this quarter and in the first-quarter 2015 then climb to $330 billion in the following three months.
The only change from last month’s forecast by economists at the secondary lender was for the second-quarter 2015, which was cut from the $350 billion previously expected.
Based on Freddie’s forecasted refinance share, refinance originations are expected to fall from $106 billion to $98 billion in the first three months of next year and decline further to $83 billion in the second quarter. Freddie previously had fourth-quarter refinances at $112 billion and second-quarter 2015 refinances at $77 billion.
The current quarter’s projected purchase production
was pushed up to $174 billion from $168 billion, while the following period’s prediction was left at $182 billion. The second-quarter 2014 outlook fell to $248 billion from $273 billion.
For all of this year, total mortgage originations are expected to come in at $1.200 trillion then fall to $1.100 trillion next year and bounce up to $1.175 trillion in 2016.
No changes from November were made by Freddie to the annual numbers.
But the 2014 outlook for refinances was cut to $0.480 trillion from $0.516 trillion. Next year’s refinance outlook, however, was lifted to $0.275 trillion from $0.253 trillion, and the following year’s refinance outlook leapt to $0.235 trillion from $0.176 trillion.
The annual totals were based on a 40 percent refinance share for this year, a 25 percent share in 2015 and a 20 percent share the following year.
Changes in expected refinance volume were exactly offset by projected purchase originations, which are projected to reach $0.720 trillion in 2014 versus the $0.684 trillion previously predicted. Next year’s purchase financing forecast was lowered to $0.825 trillion from $0.847 trillion, and the 2016 outlook was cut to $0.940 trillion from $0.999 trillion.
Freddie has the government share of mortgage originations at 19.9 percent in 2014 and 20.0 percent for next year and 2016.
Adjustable-rate mortgage share is expected to go from 11 percent this year to 14 percent in 2015 then jump to 18 percent the following year.
