It turns out that more refinances were closed in the final quarter of last year than originally estimated, though purchase financing activity was lower than previously thought.
Total residential originations are expected to rise to $345 billion in the first quarter of this year from $280 billion three months earlier.
Second-quarter 2015 volume is forecasted to reach $375 billion, while the projection for the third quarter is $325 billion.
Freddie Mac made the predictions in its
March 2015 Economic and Housing Market Outlook.
Based on Freddie’s estimated refinance share, purchase financing accounted for $140 billion of fourth-quarter production, down from $174 billion estimated in last month’s forecast. Purchase activity is expected to jump to $179 billion in the first quarter and $233 billion in the second quarter.
The secondary lender has refinance production climbing from $140 billion in the last three months of 2014 to $166 billion this quarter and $143 billion in the second quarter. Estimated fourth-quarter refinances were raised from $106 billion forecasted in February.
From Jan. 1 through Dec. 31 of this year, Freddie expects that
mortgage originations from all U.S. lenders will be $1.300 trillion. Next year’s production is projected to slip to $1.275 trillion.
Freddie lowered its full-year 2014 estimate of purchase volume to $0.684 billion from $0.720 billion predicted in February.
Purchase financing is expected to rise to $0.780 trillion
in 2015 and $0.893 trillion next year.
Freddie increased its refinance forecast for 2014 to $0.516 trillion from $0.480 trillion projected in the last outlook. Refinances are predicted to inch up to $0.520 trillion this year then fall to $0.383 trillion in 2016.
Refinance share is estimated 43 percent for last year and predicted to fall to 40 percent in 2015 and 30 percent next year.
Home loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs are expected to account for one-fifth of this year’s and next year’s total originations.
The share of adjustable-rate mortgages
is projected at 11 percent for 2015 and 15 percent for next year.
