Economists at Freddie Mac have increased expected home purchase financing for this year and even nudged up projected refinance production.
Total U.S. mortgage originations, including refinances and purchases, at primary lenders are expected to reach $335 billion during the first quarter.
Business is then expected to
climb to $480 billion during the following three months before retreating to $435 billion during the third-quarter 2016.
Freddie made the predictions in its March 2016 Economic & Housing Market Forecast.
The current-quarter projection was raised from $320 billion expected in last month’s outlook, while the second-quarter forecast increased from $460 billion and the following quarter’s prediction rose from $420 billion.
Based on projected refinance share, refinance originations are expected to go from $161 billion in the first quarter to $187 billion during the next three months and $157 billion in the third quarter.
Last month, Freddie expected refinances to rise from $154 billion to $202 billion then settle at $155 billion in the third quarter.
Purchase financing will leap from $174 billion to $293 billion in the second quarter then retreat to $278 billion the following three months.
The secondary lender boosted its purchase outlook from $166 billion in the first quarter, $258 billion the following quarter and $265 billion in the third quarter.
Overall full-year 2016 originations are predicted to reach $1.650 trillion, more than the $1.580 trillion expected last month.
But Freddie left next year’s mortgage finance forecast at $1.460 trillion.
This year’s projected refinance production was lifted to $0.644 trillion from $0.632 trillion in the last outlook. There was no change to 2017’s refinance forecast of $0.350 trillion.
Freddie has refinance share at 39 percent this year and 24 percent in 2017.
But a more robust improvement was made to the 2016 purchase financing forecast, which is now pegged at $1.007 trillion versus just $0.948 trillion last month. Next year’s purchase-money lending outlook was left at $1.110 trillion.
Based on expected originations of loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs, government share of originations is expected to be 23.7 percent this year and 25.3 percent in 2017.
