Projected second-half originations were boosted by $46 billion over last month’s forecast. But next year’s business is predicted to be the worst in a decade. One-in-10 mortgages is expected to be adjustable-rate by the end of next year, while refinance share will likely thin considerably.
Fourth-quarter residential originations will be $420 billion based on Freddie Mac’s December forecast. Predicted production will ease slightly from a revised $425 billion in third-quarter fundings.
Last month Freddie had U.S. originations rising to $400 billion this quarter from the third quarter’s $399 billion.
First-quarter 2011 business is expected to fall to $277 billion, according to this month’s report.
The latest projection indicates FHA and VA business will fall to $93 billion in the current quarter from $95 billion during the prior three-month period. Conventional fundings are forecasted to fall to $327 billion from $330 billion.
Full-year 2010 originations are expected to fall to $1.550 trillion from last year’s $2.000 trillion.
Volume is expected to tumble further to $1.200 trillion next year — the lowest level since $1.184 trillion during the year 2000. But a rebound to $1.600 trillion in 2012 is forecasted.
Freddie expects adjustable-rate mortgages to account for 6 percent of fourth-quarter production, up from 5 percent three months earlier. By the end of next year, ARM share is expected to reach 10 percent.
Refinance share is expected to fall to 71 percent in the current period from three-quarters during the prior period. Freddie said the share will be 37 percent by Dec. 31, 2011.
