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| Although mortgage applications have declined by more than half during the past two months, Freddie Mac is still projecting that third-quarter originations for U.S. lenders will jump by more than 20 percent from the current quarter.
Second-quarter residential originations are projected by Freddie Mac to come in at $730 billion, rising from an estimated $466 billion in the first quarter, according to its June 2009 Economic and Housing Market Outlook released today. Estimated first-quarter volume was raised from $420 billion in Freddie’s prior outlook. Freddie projects quarterly production will peak in the third quarter at $890 billion. But the third-quarter forecast seems outdated now that rising mortgage rates have scared off prospective borrowers. Weekly data from the Mortgage Bankers Association indicate that new loan applications have steadily declined over the past two months and were down in the trade group’s survey released yesterday by more than half since the week ending April 3. Conventional originations are projected to rise from an estimated $370 billion in the first quarter to $603 billion this quarter and $753 billion during the third quarter. Government fundings are predicted to rise from the first quarter’s $96 billion to $128 billion in the second quarter and $137 billion in the third quarter. On an annual basis, residential fundings are expected to total $2.700 trillion this year, climbing from an estimated $1.700 trillion in 2008. Next year, Freddie predicts $2.175 trillion in volume. Conventional fundings accounted for $2.238 trillion of Freddie’s full-year 2009 projection, soaring from an estimated $1.410 trillion the prior year. Conventional business is expected to fall to $1.750 trillion next year. FHA and VA activity is projected to rise to $0.463 trillion this year from 2008’s $0.290 trillion. During 2010, Freddie estimates government originations of $0.425 trillion. Adjustable-rate mortgage share, which MBA reported yesterday at 3.4 percent, is forecasted for the second quarter by Freddie to be only 2 percent, where it will sit until the first quarter of next year — when it begins to rise 1 percent per quarter until the end of 2010. Refinance share, which MBA reported yesterday at 59 percent, is projected by Freddie to come in at 71 percent this quarter, then decline to 46 percent by the fourth-quarter 2010. The 30-year fixed-rate mortgage, which Freddie reported today at 5.59 percent, is projected to average 4.9 percent this quarter and 5.3 percent in the third quarter. |
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