The volume of home loans now forecasted to be refinanced this year is nearly $50 billion more than was expected last month.
Including refinances and purchase financing,
$400 billion in residential loans are expected to be originated during the second quarter.
Business is then expected to decline by $70 billion in the following three-month period
and skid to $270 billion by the fourth-quarter 2015.
The current quarter’s prediction, made in Freddie Mac’s
May 2015 Economic and Housing Market Outlook, was up from $390 billion projected last month. The latest outlook was also up from $325 billion in expected third-quarter production and $255 billion previously predicted for the final quarter of 2015.
Freddie bumped its second-quarter 2015 refinance forecast to $180 billion from $168 billion expected last month. The volume was determined through an analysis of refinance share and total originations as forecasted by Freddie.
Third-quarter refinances are now forecasted to come in at $116 billion versus $104 billion predicted in the April outlook.
The McLean, Virginia-based firm, which manages $1.9 trillion in mortgages,
trimmed its second-quarter purchase financing forecast to $220 billion from $222 billion in the previous report and lowered its third-quarter purchase forecast to $215 billion from $221 billion.
For all 12 months of 2015, Freddie expects total originations to amount to $1.350 trillion, more than the $1.300 trillion in last month’s forecast. Next year’s projection was unchanged at $1.275 trillion.
Freddie increased this year’s refinance outlook to $0.581 trillion
from the previous outlook’s $0.533 trillion, while the 2016 forecast was the same at $0.383 trillion.
Refinance volume reflected a 43 percent 2015 refinance share and a 30 percent share for next year.
At $0.770 trillion, this year’s expected purchase financing
was slightly more than the $0.767 trillion expected in the prior month’s outlook. The 2016 outlook for purchase didn’t move from $0.893 trillion expected last month.
Mortgages insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs are expected to account for 20.44 percent of total 2015 business and 20.00 percent of next year’s activity.
Freddie has adjustable-rate mortgages accounting for 8 percent of this year’s originations and 15 percent of 2016 production.
