Although refinancings are, not surprisingly, expected to subside this year, loan originators will be taking extra steps to ensure purchase financing increases.
From Jan. 1, 2013, through Dec. 31, 2013, estimated residential originations, including purchase and refinance, ranged from a low of 6.340 million loans for $1.4080 trillion to a high of 7.124 million loans for $1.5813 trillion.
This year’s mortgage production is projected to range from 4.415 million loans for $1.0068 trillion on the low end to 4.784 million units for $1.0899 trillion on the high end.
The figures were pulled from iEmergent’s Q1 2014 update to its U.S. Mortgage Finance Forecast.
The estimate of 2013 refinance volume ranged from a low of 3.720 million loans for $0.8233 trillion to a high of 4.504 million loans for $0.9966 trillion.
This year’s refinances are set to sink, with the low end of the outlook at 1.751 million loans for $0.3945 trillion, and the high end at 2.120 million transactions for $0.4776 trillion.
Last year’s overall volume also included 2.620 million loans for $0.5847 trillion to finance the purchase of residential properties.
While purchase originations have languished for more than five years, the void being left by refinances is projected to stimulate purchase prospecting by mortgage bankers.
In addition, homeownership conditions in 2014 will facilitate a gain in purchase lending across most markets, though the recovery will remain weak.
This has iEmergent expecting purchase financing to inch up to 2.664 million loans originated for $0.6123 trillion during 2014. It would be the third consecutive annual increase for purchase production.
“The total size of the available household pool for home purchase financing is similar to levels experienced in the mid- to late-1990s, prior to the dot-com bubble,” the report said. “More than 40 percent of all U.S. households are not part of the available pool because they are not qualified, able, willing or ready to purchase and finance a home.”
Conventional loans are expected to account for 70 percent of 2014 purchase originations.
Another 20 percent of this year’s purchase production will be insured by the Federal Housing Administration, and 7 percent will be guaranteed by the Department of Veterans Affairs.
During just the current quarter, iEmergent has total purchase financing at $110.2 billion. Volume is expected to jump to $180.5 billion in the second quarter then slowly recede for the remainder of the year.
