The latest expectations for U.S. refinance originations this year were raised by more than $80 billion. But the outlook for purchase production was lowered.
Home lenders are forecasted to originate $480 billion during the first three months of 2013, then push production up to $500 billion in the second quarter. Third-quarter volume, however, is expected to fall to $410 billion.
Last month’s outlook had residential loan fundings increasing from $460 billion in the first quarter to $480 billion then dropping to $410 billion during the third-quarter 2013.
Freddie Mac, which made the predictions in its March outlook, said refinances are expected to account for $370 billion of first-quarter production and $350 billion of second-quarter activity, increasing from $345 billion and $336 billion, respectively, in the prior outlook.
The share of first-quarter refinances was raised to 77 percent from 75 percent predicted in the last forecast, while the second-quarter estimate was unchanged at 70 percent.
The purchase financing forecast fell to $110 billion from $115 billion for the first three months of 2013 but was lifted to $150 billion from $144 billion for the second quarter.
The expected share of business that will either be insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs narrowed to 17.3 percent from last month’s prediction of 18.0 percent, while the second-quarter government share was cut to 19.0 percent from 19.8 percent.
The secondary lender raised its full-year 2013 overall origination forecast to $1.750 trillion from $1.700 trillion in the previous outlook.
Next year’s business is expected to decline to $1.250 trillion, the same as Freddie expected last month.
Refinances are projected to plummet from $1.190 trillion in 2013 to $0.563 trillion next year.
The refinance outlook was boosted from last month, when Freddie predicted that refinance production would fall from $1.105 trillion to $0.563 trillion.
This year’s expected refinance share was raised to 68 percent from 65 percent, while the 2014 estimate was unchanged at 45 percent.
The 2013 purchase production projection was pulled down to $0.560 trillion from $0.595 trillion predicted in the prior report. But next year’s forecast was left at $0.688 trillion.
Government originations are expected to fall from $0.340 trillion to $0.250 trillion in 2014, the same as predicted last month.
