An improved outlook for home purchase financing this year was wiped out by a big drop in expected refinancings. But next year’s forecast was cut thanks to lowered purchase-money expectations.
When this month concludes, an estimated $445 billion in residential loans are expected to have been closed during the third quarter.
The total, which includes both refinances and loans to finance a home purchase, is expected to tumble to $375 billion during final three months of this year.
Those predictions were made by Freddie Mac in its September 2018 Economic & Housing Market Forecast.
Freddie lowered its current-quarter outlook from $454 billion in last month’s forecast, but the fourth-quarter projection was raised from $372 billion.
Based on refinance share forecasted by Freddie, refinance originations are expected to fall from $107 billion this quarter to $86 billion in the final quarter of this year. The projection was lowered from last month, when refinances were expected to decline from $127 billion to $89 billion.
The current-quarter purchase outlook was raised to $338 billion from $327 billion previously expected, and the following period’s production is now expected to be $289 billion, more than $283 billion in last month’s forecast.
Freddie trimmed its full-year 2018 overall forecast to $1.649 trillion from $1.655 trillion in last month’s outlook. Next year’s expected lending volume was cut to $1.650 trillion from $1.690 trillion.
This year’s refinances are projected at $0.478 trillion, less than the $0.497 trillion in last months report. The 2019 forecast was raised, though, to $0.413 trillion from $0.406 trillion.
Refinance share is expected to drop from 29 percent in the current year to a quarter in the following annual period.
The secondary lender increased the 2018 purchase financing outlook to $1.171 trillion from $1.159 trillion expected a month earlier. But next year’s expected purchase transactions were lowered to $1.238 trillion from $1.284 trillion.
Based on government originations predicted by McLean, Virginia-based Freddie, the share of mortgage originations that will be insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs is expected to thin from 23.9 percent this year to 23.5 percent in 2019.
