The volume of home purchase financing expected this year has been lifted. In addition, last year’s overall origination estimate also increased.
U.S. mortgage bankers are expected to generate $335 billion in residential loan production during the first-three months of this year.
Home-lending volume is then expected to rise to $443 billion in the second quarter before settling back to $432 billion three months later.
That is according to the February 2017 Economic & Housing Market Forecast from Freddie Mac.
The secondary lender raised its current-quarter forecast from $325 billion in last month’s outlook. The following period’s forecast expanded from $430 billion, and third-quarter originations were increased from $420 billion.
Based on an analysis of Freddie’s expected refinance share, the current quarter will include $131 billion in refinances, while the second-quarter is expected to include $120 billion.
The outlook for purchase financing in the first quarter
was increased to $204 billion from $195 billion in last month’s forecast. The following period’s purchase production projection was pushed up to $323 billion from $310 billion.
Freddie estimates that overall 2016 originations totaled $2.125 trillion, more than the $2.000 trillion estimate made in January. This year’s forecast increased to $1.545 trillion from $1.505 trillion, and the 2018 forecast was left at $1.500 trillion.
Last year’s refinance estimate increased to $1.020 trillion from $0.940 trillion, while the 2017 outlook was trimmed to $0.417 trillion from $0.421 trillion. No change was made to the $0.300 trillion refinance forecast for 2018.
McLean, Virginia-based Freddie raised the 2016 purchase-money estimate to $1.105 trillion from $1.060 trillion. The prediction for this year grew to $1.128 trillion from $1.084 trillion, and next year’s expected purchase financing was left at $1.200 trillion.
Refinance share is expected to plunge from 48 percent last year to 27 percent in 2017 and 20 percent the following year.
Based on Freddie’s expected government originations, loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs are estimated to account for 22.3 percent of the 2016 total. Government share is projected to make up 24.2 percent of this year’s volume and 21.7 percent of the 2018 total.
