The share of adjustable-rate originations during the first-three months of 2012 turned out to be higher than originally forecasted. The outlook for mortgage rates, meanwhile, has been lowered.
Second-quarter residential originations are projected to climb to $355 billion from an estimated $340 billion in the first quarter then drop to $300 billion in the third quarter.
Loans insured by the Federal Housing Administration are expected to make up $85 billion of this quarter’s volume, more than the $76 billion endorsed in the first quarter.
This month’s forecast was exactly the same as projected in Freddie Mac’s outlook last month.
Based on an analysis of refinance share versus total originations, refinances are expected to slip to $249 billion this quarter from the first quarter’s $255 billion, while purchase financing is expected to climb to $107 billion from $85 billion.
In the March outlook, Freddie predicted that adjustable-rate mortgages would account for 15 percent of first-quarter volume. This month’s report raised first-quarter ARM share to 17 percent. But Freddie has ARM share for the rest of the year and all of next year at 15 percent.
Full-year home-loan production is expected to decline to $1.250 trillion this year from last year’s $1.390 trillion then fall to $1.070 trillion next year — the same as was predicted last month.
Refinances will go from $0.825 trillion during 2012 to $0.642 trillion in 2013, while purchase volume will inch up from $0.425 trillion to $0.428 trillion.
The average 30-year fixed-rate mortgage was projected last month by Freddie to average 4.0 percent in the first quarter. But this month’s outlook indicates the average finished at 3.9 percent. The second-quarter prediction for the 30 year was cut to 4.1 percent from 4.2 percent, and the third-quarter rate was reduced to 4.3 percent from 4.4 percent.
