Improved conditions in the nation’s housing market have prompted mortgage banking economists to raise their expectations for this year’s and next year’s purchase financing.
Mortgage originations, including purchase financing and refinancing, are expected to fall from an estimated $395 billion in the second quarter to $344 billion during the current quarter.
In the final three months of this year, residential loan production is then expected to fall further — to just $283 billion.
That is according to the MBA Mortgage Finance Forecast from the Mortgage Bankers Association.
The trade group lifted its projections from last month, when it forecasted volume to fall from $378 billion to $318 billion in the third quarter and $272 billion during the final three months of the year.
MBA raised its second-quarter projection for purchase financing to $225 billion from $208 billion in last month’s outlook. The third-quarter purchase forecast increased to $236 billion from $210 billion, while the fourth-quarter prediction climbed to $185 billion from $174 billion.
“The housing market recovery has shifted to a higher gear. We have revised upwards our estimates and forecasts for home sales and home prices, and the cash share of purchases has declined,” an accompanying economic commentary stated. “All of these factors point to higher levels of purchase originations.
“Revisions to our purchase origination forecast in July result from changes in our expectations about the rate at which purchase applications and housing sales translate into dollars of mortgage originations.”
On the refinance side,
the association has volume falling from $108 billion in the third quarter to $98 billion three months later — unchanged from its last outlook.
For all of 2015, total originations are expected to be $1.352 trillion, more than the $1.281 trillion expected last month.
Next year’s outlook was bumped up to $1.264 trillion from $1.170 trillion.
The purchase mortgage portion of this year’s forecast is $0.801 trillion, up $0.071 trillion from MBA’s previous outlook. Next year’s purchase projection was lifted to $0.885 trillion from $0.791 trillion.
But there was no change to the forecast for refinances, which are expected to drop from $0.551 trillion this year to $0.379 trillion in 2016.
MBA has refinance share at 41 percent for 2015 and 30 percent for next year.
