As rates rise and conventional originations slide, government mortgage originations are projected to more than double.
During 2008, Freddie Mac projects total 1-4 unit originations will reach $1.936 trillion, according to an economic outlook released today. Estimated originations last year were $2.530 trillion.
Next year, Freddie forecasts residential originations of just $1.840 trillion, though 2010 production is predicted to rebound to $1.905 trillion.
But FHA and VA activity, which last year was $0.120 trillion, is expected to reach $0.280 trillion this year. Government originations are projected to peak at $0.285 trillion in 2009, then drop to $0.255 trillion by 2010.
The share of refinance activity, which was 48 percent in 2007, is projected to fall to 46 percent this year and drop to 35 percent by next year.
The average 30-year fixed rate, which was 6.3% for all of last year, was 6.1% in the second quarter of 2008. But the 30-year is projected to be 6.5% this quarter and rise 10 basis points each quarter until the fourth quarter 2007, when Freddie forecasts it will be at 7.0%. For all of 2010, the 30-year is predicted to average 6.9%.