The projection for home-purchase financing in the fourth quarter has been cut 16 percent. But a huge 45 percent increase in expected refinance closings was enough to lift the overall origination outlook for the entire year.
From its annual conference in Chicago, the Mortgage Bankers Association Tuesday estimated that U.S. lenders closed $309 billion in mortgages during the third quarter. That was the best quarter this year and the same estimate made last month.
The trade group trimmed, however, its estimate for third-quarter purchase-money production to $105 billion from last month’s prediction of $108 billion. But the calculation for refinance volume this past quarter was lifted to $204 billion from September’s $201 billion projection.
MBA increased its expectations for total fourth-quarter fundings to $282 billion from $234 billion forecasted last month.
The more optimistic outlook came despite that the projection for fourth-quarter purchase volume was cut to $79 billion from the prior month’s projection of $94 billion.
The secret was a big improvement in the outlook for refinance activity, which is forecasted at $203 billion versus just $140 billion predicted last month by the association.
On an annual basis, MBA has home-loan originations at $1.182 trillion this year, then falling to $0.907 trillion in 2012.
The previous outlook had volume at $1.135 trillion this year and $0.925 trillion next year.
In 2013, production is projected to come in at $1.103 trillion.
Refinance share is expected to go from two-thirds in the third quarter to 72 percent this quarter then slowly retreat during all of next year.
The share of volume that will be adjustable-rate will drop to 4 percent in the second-half 2011, then spend next year at between 5 and 6 percent.
