Freddie Mac has improved its outlook for industry-wide single-family lending this year and next year by $140 billion. A majority of the increase went to home purchase financing.
In its
July 2017 Economic & Housing Market Forecast, the secondary lender predicted mortgage originations will be $485 billion in the third quarter, down from $529 billion three months earlier.
Freddie revised up its third-quarter projection from $469 billion in its June forecast, while the second-quarter estimate increased from $512 billion.
Expected fourth-quarter 2017 production was increased to $389 billion from $377 billion predicted in the prior-month outlook.
The quarter-over-quarter decline expected for this quarter contrasts reports from home lenders of increased application activity between the first and second quarters of this year, suggesting current-quarter originations are as strong as the second quarter’s.
Based on an analysis of Freddie’s refinance share and total originations, Mortgage Daily estimates that refinance originations will go from $146 billion in the third quarter to $109 billion during the final-three months of 2017. In the previous forecast, refinance volume was expected to go from $141 billion to $106 billion.
That leaves an estimated $340 billion in current-quarter purchase-money production. Purchase financing is then expected to tumble to $280 billion in the final quarter of this year. The purchase outlook improved from a previously expected $328 billion for the third quarter and $271 billion for the fourth quarter.
For all four quarters of this year, Freddie predicts originations will total $1.800 trillion, more than $1.755 trillion in the June report. The 2018 forecast rose to $1.695 trillion from $1.600 trillion predicted a month earlier.
The annual refinance projection was raised to $0.594 trillion for this year from $0.579 trillion. Next year’s rose to $424 billion from $400 billion.
Refinance share is expected to drop from a third in 2017 to a quarter in 2018.
Loans to finance a home purchase are likely to account for $1.206 trillion of this year’s activity, more than $1.176 trillion previously expected. Next year’s purchase forecast was raised to $1.271 trillion from $1.200 trillion.
The share of mortgages either insured by the Federal Housing Administration or guaranteed by the Department of Veterans affairs is expected to thin from 21.4 percent in 2017 to 20.4 percent in 2018.
