Economists at the Federal Home Loan Mortgage Corp. have dramatically improved their outlook for fourth quarter refinance activity. Even purchase activity looks better.
Last month, Freddie Mac projected that fourth-quarter residential originations by all U.S. lenders would amount to $221 billion.
This month, the fourth-quarter forecast has been raised to $371 billion.
Behind the 68 percent increase in Freddie’s forecast was a 98 percent revision in expected refinance production, which is now forecasted to reach $286 billion this quarter versus the $144 billion projected in last month’s report.
Expected refinance share was raised to 77 percent from less than two-thirds in last month’s outlook.
The projection for purchase production was also increased, with $85 billion now expected in the fourth quarter as opposed to $77 billion predicted in September.
Fourth-quarter conventional production is forecasted at $260 billion, while government volume is estimated at $111 billion.
The stronger quarterly outlook lifted the full-year forecast to $1.3 trillion versus the $1.2 trillion in last month’s outlook.
Freddie also raised the full-year outlook for both 2012 and 2013 by $100 billion each to $1.000 trillion now projected for each of the two years.
