Fannie Mae lifted its forecast for this year’s refinance originations and made an even bigger upward adjustment to its projection for next year’s refinances.
Overall production, including refinances and purchase financing, by all U.S. lenders is forecasted to drop from $288 billion in the fourth quarter to $232 billion during the following three months. Originations are then expected to bounce up to $281 billion in the second-quarter 2015.
That was an improvement over last month’s projection, when Fannie predicted that industry volume would fall from $260 billion to $218 billion in the first-quarter 2015 then climb to $272 billion.
The outlook was delivered in the Washington-based company’s Housing Forecast: November 2014.
Fannie raised its fourth-quarter refinance outlook to $114 billion from just $87 billion expected last month, while the following quarter’s projection increased to $95 billion from $81 billion.
The prediction for fourth-quarter purchase production, however, slipped to $173 billion from $174 billion, while the first-quarter 2015 forecast was unchanged at $137 billion.
For all of this year, Fannie expects total originations to be $1.123 trillion, up from last month’s prediction of $1.098 trillion. Next year’s forecast increased to $1.043 trillion from $1.013 trillion.
Refinances are expected to account for $0.451 trillion of 2014 activity — more than the $0.425 trillion expected in the previous report. The 2015 refinance outlook improved to $0.331 trillion from $0.301 trillion.
Refinance share is expected to drop from 40 percent in the current year to 32 percent in 2015.
Full-year 2014 purchase financing is now expected to reach $0.672 trillion versus the $0.674 trillion predicted last month.
Next year’s projection for purchase production was left at $0.712 trillion.
Ten percent of 2014 originations are expected to be adjustable-rate mortgages, while ARM share is predicted to be 11 percent next year.
Fannie has outstanding mortgages climbing from $9.855 trillion this year to $9.882 trillion in 2015.
First mortgages are expected to account for $9.179 trillion of 2014’s outstandings and $9.200 trillion of next year’s total.
