This year’s outlook for home-loan production has improved again, with the latest forecast raised by $58 billion. Increased optimism was the result of stronger refinance activity.
Residential loan originations are projected to climb to $436 billion in the third quarter from $413 billion in the second quarter then tumble to $347 billion during the final three months of 2012.
Last month’s forecast called for home-loan production to sink to $364 billion this quarter from the prior quarter’s $451 billion then fall further to $322 billion in the fourth quarter.
The outlook from Fannie Mae indicated that the forecast for third-quarter refinance originations was lifted to $298 billion from last month’s projection of $223 billion, while the fourth-quarter forecast was increased to $225 billion from $200 billion.
The boost reflected an increase in expected refinance share — to 68 percent from last month’s expectations of 61 percent for the third quarter and to 65 percent from 62 percent for the final quarter of 2012.
Fannie, however, lowered its third-quarter outlook for purchase financing to $138 billion from $141 billion but left the fourth-quarter estimate at $121 billion.
The projected share of production that will be adjustable-rate is 5 percent this quarter and 6 percent during each of the following three quarters.
The annual forecast for home-loan production was increased to $1.578 trillion for this year from last month’s projection of $1.520 trillion.
Next year’s outlook was raised to $1.219 trillion from $1.211 trillion.
Purchase production is expected to total $0.497 trillion in 2012, while refinance originations are projected to reach $1.081 trillion.
This year is expected to end with $10.147 trillion in residential mortgages outstanding then climb to $10.323 trillion in 2013.
First mortgages are expected to account for $9.330 trillion of the 2012 outstandings and $9.514 trillion of next year’s.
