Mortgage Daily

Published On: January 13, 2014

Expectations for this year’s mortgage production have been lowered, and the outlook for refinances took the biggest hit. Next year, adjustable-rate mortgages are expected to account for nearly one-in-five loans.

The latest prediction is for U.S. mortgage bankers to originate $276 billion in the first quarter, less than the $303 billion in estimated originations for the fourth quarter of last year.

Business is then expected to jump to $350 billion in the second quarter and $343 in the following three-month period.

Fannie Mae’s forecast was cut from last month, when loan production was expected to go from $305 billion to $285 billion in the first quarter then climb to $368 billion in the next period and $352 billion in the third-quarter 2014.

The fourth-quarter 2013 refinance outlook was lifted from $137 billion to $142 billion, while this quarter’s refinance projection was trimmed to $131 billion from $136 billion.

Fannie’s estimate of fourth-quarter 2013 purchase financing fell to $160 billion from $169 billion, and the first-quarter 2014 purchase outlook was trimmed to $145 billion from $148 billion.

Fannie lowered its estimate for full-year 2013 total production to $1.817 trillion from $1.824 trillion. This year’s outlook was cut to $1.255 trillion from $1.319 trillion.

Fannie predicts that 2015 residential originations will amount to $1.145 trillion.

Last year’s refinance estimate inched up to $1.129 trillion from $1.126 trillion. The 2014 refinance forecast, however, fell to $0.469 trillion from $0.520 trillion.

In 2015, Fannie expects primary lenders to originate just $0.300 trillion in refinances.

Refinance share is expected to go from 62 percent in 2013 to 37 percent this year then sink to just over a quarter next year.

Last year’s estimate for purchase financing was reduced to $0.688 trillion from $0.699 trillion, while this year’s purchase forecast fell to $0.786 trillion from $0.800 trillion.

Fannie expects that the share of business that will be adjustable-rate mortgages will climb from 7 percent in 2013 to 12 percent this year then soar to 18 percent in 2015.

The aggregate balance of all residential loans outstanding was estimated at $9.865 trillion as of 2013. The collective U.S. book of business is expected to grow to $10.035 trillion this year then rise to $10.254 trillion next year.

The first lien portion of outstandings is forecasted to rise from $9.155 trillion to $9.333 trillion in 2014 then climb to $9.542 trillion in 2015.

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