Origination Forecast Cut

Home-loan originations are projected to total $451 billion during the first three months of this year then fall to $430 billion in the second quarter.

Last month, the same forecast called for volume to increase from $456 billion to $460 billion.

Fannie Mae’s outlook indicates that refinances are expected to account for $334 billion of first-quarter volume and $249 billion of the following quarter’s business. Purchase production is predicted to pick up, however, climbing from $117 billion to $180 billion.

The prior outlook from the secondary lending had full-year 2012 residential lending at $1.921 trillion. Fannie lifted last year’s number to $1.926 trillion.

Expectations for this year’s originations fell to $1.507 trillion from $1.603 trillion, and the 2014 forecast was reduced to $1.117 trillion from $1.165 trillion.

Fannie cut the estimate of 2012 refinances to $1.395 trillion from the previous forecast of $1.403 trillion, while this year’s projection was lowered to $0.880 trillion from $0.961 trillion, and the 2014 outlook fell to $0.386 trillion from $0.438 trillion.

Refinance share is estimated at 72 percent for last year. The share is projected to fall to 58 percent in 2013 and 35 percent next year.

The lowered expectations reflect changes in the forecast for mortgage rates. Last month, Fannie had 30-year fixed-rate mortgages moving from 3.6 percent in 2013 to 4.0 percent in 2014. Now Fannie sees rates going from 3.8 percent this year to 4.4 percent in 2014.

At the same time, last year’s estimated purchase-money production was lifted to $0.530 trillion from $0.518. While the 2013 purchase-money forecast was trimmed to $0.628 trillion from $0.642 trillion, next year’s projection increased to $0.731 trillion from $0.727 trillion.

Total mortgages outstanding will fall from $9.872 trillion in 2012 to $9.774 trillion this year then increase to $9.974 trillion in 2014.