The latest economic outlook has refinance originations tumbling and adjustable-rate share soaring.
The outlook was released today by Fannie Mae.
The government-controlled firm projected $347 billion in first-quarter production. The forecast is a significant drop from an estimated $569 billion in fourth-quarter 2008 fundings.
By the second quarter, activity is expected to rise to $369 billion.
Fannie said refinances are anticipated to account for 60 percent of the current quarter’s production, lower than 65 percent the prior quarter. Refinance share is expected to tumble to 38 percent in the second quarter.
For all of this year, fundings are forecasted to come in at $1.353 trillion — sinking from $1.994 trillion last year. During 2010, originations are expected to climb to $1.582 trillion.
The Washington, D.C.-based company projects that U.S. single-family loans outstanding are expected to fall to $10.705 billion this quarter from $10.801 billion three months earlier. Outstanding loans are expected to fall further in the second quarter — to $10.654 billion.
Included in first-quarter outstandings are $9.666 trillion in first liens, lower than $9.753 trillion three months earlier. By the second quarter, first liens are predicted to fall to $10.654 trillion.
One area Fannie projects an increase, however, is in the share of adjustable-rate mortgage applications. This quarter’s ARM share is expected to increase to 8 percent from the fourth quarter’s 6 percent. By next quarter, ARM share is expected to be at 10 percent.
