The latest economic forecast has this year’s and next year’s mortgage refinances coming in over $300 billion higher than projected just last month. Expected purchase financing, though, diminished.
From July 1 through Sept. 30, total mortgage originations — including refinancing and purchase financing — are predicted to
reach $490 billion, more than the $450 billion expected as of last month.
The fourth-quarter outlook was raised to $435 billion from $410 billion, while the projection for mortgage production during the first-quarter 2017 is now at $390 billion versus $380 billion in June.
Economists at Freddie Mac made the most-recent predictions in its
July 2016 Economic & Housing Market Forecast.
Based on refinance share in the secondary lending giant’s outlook, third-quarter refinance production is expected to reach $235 billion, climbing from $171 billion expected in June. The fourth-quarter refinance projection rose to $196 billion from $144 billion.
Purchase financing, on the other hand, is now predicted to be $255 billion during the current quarter compared to $279 billion in last month’s forecast. Expected purchase production
in the final quarter of this year was cut to $239 billion from $267 billion.
For all four quarters of 2016, Freddie has overall residential loan originations at $1.825 trillion, rising from $1.725 trillion in the prior-month forecast and potentially making this year the best for mortgage originations since 2013, when volume was estimated at $1.925 trillion.
Next year’s projected production was raised to $1.550 trillion
from $1.460 trillion expected in the month-earlier outlook.
Freddie boosted its full-year 2016
refinance outlook to $0.894 trillion from $0.707 trillion, while the 2017 forecast increased to $0.496 trillion from $0.350 trillion.
Refinance share in the outlook is 49 percent this year and 32 percent next year.
Purchase financing is now expected to reach $0.931 trillion in 2016, less than the $1.018 trillion predicted one month earlier. Next year’s purchase outlook fell to $1.054 trillion from $1.110 trillion.
Mortgages insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs are expected to account for 22.8 percent of overall 2016 originations and 25.3 percent of next year’s total.
