Thanks to a stronger refinance outlook, more business is expected during the first six months of 2012 than was forecast last month.
Residential lenders are expected to originate $340 billion during the first quarter, Freddie said in its monthly housing forecast.
In January, the secondary lender predicted that just $300 billion would be closed in the first quarter.
The second-quarter projection was also increased, to $335 billion from last month’s prediction of $325 billion.
The improvement came despite that the volume of forecasted purchase financing for the first half was cut to $161 billion from $173 billion in January’s outlook.
The strength was in refinance business, with the projection for refinances raised to $514 billion for the first six months of 2012 from the prior forecast of $453 billion.
Refinance share of originations is expected to fall from 79 percent this quarter to 73 percent in the second quarter. The share declines to 50 percent by the first-quarter 2013, where it is expected to stay for the rest of next year.
Government production, including loans insured by the Federal Housing Administration and guaranteed by the Department of Veterans Affairs, is expected to edge down from $78 billion in the first quarter to $77 billion during the following three months. Conventional production is forecasted to slip from $262 billion to $258 billion.
For all of this year, Freddie predicts that home-loan volume will rise to $1.150 trillion from $1.350 trillion originated in 2011. Next year’s production is projected to be $1.020 trillion.
