A 30-basis-point increase in expected interest rates has led to a small reduction in projected first-quarter mortgage production.
Total home-lending activity, including purchase financing and refinancing, is expected to reach $470 billion in the fourth-quarter 2016.
Originations are then expected to fall to $352 billion in the following period and bounce up to $430 billion in the second-quarter 2017.
Those predictions were made by the Mortgage Bankers Association in its MBA Mortgage Finance Forecast.
MBA reduced its first-quarter 2017 outlook from $365 billion expected in last month’s forecast. The reduction came as the association increased expected 30-year fixed rates for the first-three months of next year to an average of 4.3 percent from 4.0 percent previously projected.
The trade group has purchase-money originations falling from $232 billion in the current quarter to $212 billion in the first-three months of next year. The first-quarter 2017 projection was reduced from $220 billion expected in last month’s report.
Refinance production is expected to tumble from $238 billion in the fourth-quarter 2016 to $140 billion the following quarter. MBA trimmed the first-quarter 2017 outlook from $145 billion expected last month.
Total originations are expected to amount to $1.891 trillion during all of 2016 then fall to $1.571 trillion
the following year. Lending activity is predicted to rise to $1.588 trillion in 2018 and $1.640 trillion a year later. The 2017 forecast was trimmed from $1.584 trillion predicted last month.
Purchase financing is forecasted to climb from $0.990 trillion this year to $1.092 trillion in 2017, $1.178 trillion the following year and $1.245 trillion in 2019. Next year’s outlook was lowered from $1.100 trillion expected as of November.
MBA has refinance volume plunging from $0.901 trillion in 2016 to $0.479 trillion in 2017, $0.410 trillion
in 2018, and $0.395 trillion a year later. The 2017 refinance forecast was lowered from $0.484 trillion forecasted the previous month.
Refinance share is predicted to thin from 48 percent this year to 30 percent in 2017, 26 percent the following year and 24 percent in 2019.