A significant improvement in the forecast for refinance production has been made by Freddie Mac thanks to falling rates. Even expected purchase lending increased.
During the second quarter of this year,
overall mortgage originations — including refinancing and purchase financing — are expected to total $512 billion.
Home-lending activity is then expected to decline to $469 billion three months later and $377
billion during the final-three months of this year.
The McLean, Virginia-based secondary mortgage lender made the predictions in its May 2017 Economic & Housing Market Forecast.
Freddie increased its current-quarter forecast from $443 billion predicted in last month’s outlook. The third-quarter outlook improved from $432 billion, and the fourth-quarter forecast was lifted from $335 billion.
Based on an analysis of refinance share, second-quarter refinance production is projected at $159 billion, up from $120 billion expected in April. The third-quarter outlook improved to $141 billion from $104 billion.
“Cashout refinance activity has been picking up and low rates moderated the decline in rate-term refinances,” the report stated. “The decline in rates since March should help spur additional refinance activity.”
Freddie lifted the second-quarter purchase financing forecast to $353 billion from $323 billion, while the following period’s expected purchase volume was left at $328 billion.
The report has overall originations coming in at $1.755 trillion during all of 2017, jumping from just $1.545 trillion in the outlook from a month earlier. Next year’s expected volume was raised to $1.600 trillion from $1.500 trillion.
This year’s projected refinances soared to $0.579 trillion from $0.417 trillion, while 2018’s projections climbed to $0.400 trillion from $0.300 trillion.
Refinance share is expected to thin from a third in 2017 to
a quarter a year later.
Loans to finance a home purchase are expected to total $1.176 trillion during the current year, more than $1.128 trillion expected in the last outlook. The 2018 purchase-money lending forecast was left at $1.200 trillion.
The share of home loans that are insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs is anticipated to fall from 21.4 percent in 2017 to 20.4 percent the following year.
