Mortgage bankers have increased their expectations for quarterly loan production four times in a row now — bringing their forecast more in line with Mortgage Daily’s.
Four months ago, the Mortgage Bankers Association predicted that U.S. lenders would originate just $171 billion in residential loans during the fourth quarter.
Even as recently as September economists at the trade group forecasted fourth-quarter volume at only $234 billion. At the same time, Mortgage Daily projected more than $300 billion in fourth-quarter production.
In MBA’s forecast released Wednesday, the association upped its fourth-quarter outlook to $343 billion from last month, when the projection was $282 billion.
The bulk of the increased outlook was with refinances, which the group now projects will reach $263 billion versus the $203 billion in refinances forecasted for the fourth quarter last month.
Fourth-quarter refinance share, which MBA said last month would be around 72 percent, is now expected to come in at 77 percent then slip below two-thirds in the first three months of 2012.
Even the estimate of purchase production was lifted — to $80 billion from $79 billion.
The share of borrowers who choose an adjustable-rate mortgage is forecasted to be 4 percent for the entire second half, the same as in last month’s report. First-half 2012 ARM share is expected to be 5 percent then rise to 6 percent in the second half of next year.
But MBA sees a big dropoff in volume for the first quarter of next year — with the projection at just $257 billion. However, with rates still lingering near all-time lows, MBA is likely to increase its expectations for that period also.
For all of 2011, total U.S. production is predicted to come in at $1.244 trillion, an increase from the $1.182 trillion projected in the prior outlook. Originations will fall to $0.936 trillion next year then climb to $1.092 trillion in 2013.
Market research firm iEmergent issued a forecast Tuesday indicating that this year’s production will likely end up at $1.1 trillion.
Next year, iEmergent has total originations at between 4.14 million loans for $0.826 billion and 4.56 million loans for $914 billion.
Refinances are expected to range from a low of 2.00 million loans for $420 billion to a high of 2.42 million loans for $508 billion.
Next year’s purchase production is projected at 2.14 million loans for $406 billion, down around 1.49 percent from this year.
“The rates at which individual local markets and household segments generate purchase mortgages are the lowest in 20 years, as the banking and mortgage industry continues to be faced with a litany of reputational issues, and significant economic obstacles remain for U.S. households,” iEmergent said. “As a result of the housing collapse that began in 2007, the total size of the available household pool has now fallen to levels last seen in 1994.”
