For all of 2009, Freddie expects one- to four-unit financing to reach $2.650 trillion, up from an estimated $1.700 trillion last year. The latest forecast is a $250 billion improvement over March’s forecast — when Freddie boosted its estimate by $400 billion. During 2010, production is projected to decline to $2.175 trillion — a slight improvement over the previous estimate.

Conventional production is expected to account for $0.330 trillion of first-quarter fundings and $0.603 trillion of second-quarter activity. Full-year conventional activity is predicted to come in a $2.170 trillion, up from an estimated $1.410 trillion in 2008. Last month, Freddie predicted 2009 conventional business would total $1.945 trillion.

FHA and VA volume is projected to increase to $0.100 trillion from the prior quarter’s $0.084 trillion. Second-quarter government business is estimated at $0.128 trillion, and full-year 2009 government originations are expected to reach $0.480 trillion — up from the prior projection of $0.455 trillion.

The refinance share of originations peaked at 78 percent in the first quarter, up from the fourth quarter’s 58 percent and an expected 75 percent in the second quarter.

The 30-year fixed-rate mortgage is forecast to decrease from the first quarter’s 5.1 percent to 4.9 percent during the current quarter. After that, the 30-year yield is expected to steadily climb to 5.5 percent by the middle of next year.

The one-year Treasury-indexed adjustable-rate mortgage was 4.9 percent in the first quarter, falling from 5.1 percent in the previous period. The 1-year is predicted to ease to 4.8 percent this quarter then edge up to 5.0 percent by the end of the year.

Freddie said the ARM share of business during the first quarter will remain unchanged from the fourth quarter’s 3 percent but rise to 6 percent by the end of the year. By the second-second quarter 2010, ARM share is expected to reach 8 percent.