Expectations for residential originations during the first six months of this year have been raised by more than $45 billion. By the second quarter, financing for home purchases is expected to leap by nearly a third and not look back.
One- to four-family originations are expected to be $300 billion during the first quarter.
While that is a big drop from $371 billion in estimated volume during the fourth-quarter 2011, it’s an improvement from the $270 billion in first-quarter production predicted last month by Freddie Mac.
Freddie also raised its second-quarter outlook, to $325 billion from $309 billion.
The increase was relatively balanced between government and conventional originations. Freddie now has the production of loans either insured by the Federal Housing Administration or guaranteed by the Department of Veterans’ Affairs climbing from the first quarter’s $72 billion to $78 billion in the second quarter. Conventional business is expected to rise from $228 billion to $247 billion.
The share of business that will be refinance is three-quarters for the current period and 70 percent in the second quarter. By next year, the refinance share is expected to fall to half, where it will stay all year.
Refinance production is projected to fall from the fourth quarter’s $297 billion to just $124 billion by the final quarter of 2012.
But purchase production is expected to jump from $75 billion in first three months of this year to $98 billion by the second quarter then move past $100 billion in the final three months of this year.
The share of mortgages that will include an adjustable-rate feature is not expected to budge from the 14 percent level it stood at during the fourth-quarter 2011 through at least the end of next year.
Full-year production is expected to fall from $1.300 trillion last year to $1.100 trillion during all of 2012. Next year, Freddie predicts that U.S. lenders will originate just $1.020 trillion in residential loans.
