Just a month after increasing its three-year outlook for residential loan originations by a whopping half-trillion dollars, Fannie Mae has expanded its forecast even further.
Fannie projects that U.S. home lending will fall from $401 billion in the current quarter to $306 billion in the first-quarter 2016 then rise to $380 billion three months later.
In last month’s outlook, production was expected to fall from $394 billion in the fourth quarter to $298 billion then bounce up to $383 billion in the second-quarter 2016.
The latest predictions were made in the secondary lender’s Housing Forecast: November 2015.
On just refinances, production is expected to fall from $157 billion to $133 billion in the first three months of next year and $113 billion in the second quarter. The prior forecast was for refinances to come in at $148 billion this quarter, fall to $126 billion in the first-quarter 2016 and $118 billion three months later.
Purchase financing is projected to tumble from $244 billion to $173 billion
then jump to $267 billion in the second-quarter 2016. The previous outlook for purchases was $246 billion in the fourth quarter, $172 billion the following period and $265 billion in the second quarter of next year.
The forecast for full-year 2015 mortgage originations
was lifted to $1.711 trillion from $1.697 trillion expected last month, while next year’s outlook was trimmed to $1.405 trillion from $1.408 trillion.
Fannie predicts that 2017 home lending will amount to $1.388 trillion.
Last month, Fannie increased its collective estimate for
2014, 2015 and 2016 originations by $526 billion.
In the latest outlook, this year’s refinance outlook was increased to $0.788 trillion from $0.779 trillion projected in October, and next year’s was left at $0.452 trillion. Fannie expects refinances to fall to $0.389 trillion in 2017.
Refinance share is expected to fall from 46 percent this year to 32 percent in 2016 and 28 percent in 2017.
The 2015 purchase financing forecast was raised to $0.923 trillion from $0.917 trillion, and next year’s purchase volume is now expected to only reach $0.953 trillion versus the $0.956 trillion in last month’s forecast.
For 2017, Fannie estimates that $0.998 trillion in purchase-money mortgages will be originated.
