The forecast for this year’s refinance originations was increased by nearly $200 billion, while next year’s outlook was boosted by even more. Even the estimate for last year was lifted. Although expectations for 2013’s purchase production also improved, current market conditions point to an even better outlook.
Residential lenders are expected to originate $464 billion during the fourth quarter, down from the third-quarter estimate of $559 billion.
But that is better than last month’s forecast, which had fourth-quarter activity at just $347 billion and third-quarter production at $436 billion.
The latest projections were released Thursday by Fannie Mae.
Refinance volume is forecasted to fall from the third quarter’s $413 billion to $338 billion during the current quarter, while refinance share is expected to fall from 74 percent to 73 percent.
Purchase production is predicted to go from $145 billion to $126 billion in the fourth quarter.
Fannie has adjustable-rate mortgage share at 5 percent in the second half of this year and 6 percent during the first nine months of next year.
Full-year originations are expected to climb from $1.496 trillion in 2011 to $1.792 trillion in 2012 then drop to $1.475 trillion in 2013.
Last month’s forecast was for volume to rise from $1.362 trillion to $1.578 trillion this year then retreat to $1.219 trillion next year.
The bulk of the increase was with refinance business — with the 2011 refinance forecast raised to $0.981 trillion from $0.896 trillion, this year’s projections raised to $1.280 trillion from $1.081 trillion and 2013’s outlook increased to $0.909 trillion from $0.669 trillion.
Reflected in the refinance origination forecast was an increase in the expected refinance share to 71 percent for this year from 69 percent predicted last month and to 62 percent for next year from 55 percent previously projected.
Fannie also expanded the projection for purchase production to $0.512 trillion in 2012 from $0.497 trillion forecasted in the previous outlook.
While next year’s purchase forecast increased to $567 billion from last month’s prediction of $550 billion — the actual amount might be much higher given the rebounding housing market, growing certainty among lenders about the level of repurchase demands and the potential for lenders to be shielded from litigation if the Consumer Financial Protection Bureau provides such safe harbor with its qualified mortgage rule.
Fannie cut its estimate of outstanding mortgages to $10.167 trillion as of last year, $9.990 trillion this year and $9.922 trillion in 2013. The first-mortgage portion of outstandings is expect to contract from $9.314 trillion in 2011 to $9.198 trillion in 2012 and $9.158 trillion next year.
