|Despite the refinancing frenzy that has erupted with falling rates, Freddie Mac has again lowered its projections for U.S. residential originations. But the forecast for just government originations has improved.
The estimate for overall third-quarter production was revised to $0.400 trillion, Freddie said in its December Economic Outlook released today. Last month, third-quarter volume was estimated at $0.405 trillion.
For all of 2008, one- to four-unit originations are projected at $1.781 trillion, down from last month's forecast of $1.786 trillion. Next year's fundings are now projected at $1.600 trillion, down from $1.650 trillion.
The lowered expectations contrast a recent surge in refinance activity -- helping to push the Mortgage Bankers Association's Refinance Index to 4156.0 from as low as 1075.4 last month.
Conventional volume estimates drove the decline in forecasted activity.
Freddie estimated third-quarter conventional activity at $0.310 trillion in its latest report, down from $0.315 trillion. This year's total is expected to amount to $1.490 trillion, down from the prior estimate of $1.500 trillion. Next year's projection of conventional activity was lowered to $1.200 trillion from $1.310 trillion.
But Freddie boosted its projections for government mortgage originations.
During the third quarter, FHA and VA production was reported at $0.090 trillion, unchanged from November's report.
But full-year government volume is now projected to reach $0.291 trillion, climbing from the prior projection of $0.286 trillion. Originations during 2009 are forecast at $0.400 trillion, jumping from $0.340 trillion.