A healthier outlook for both refinance and purchase originations prompted mortgage bankers to increase their expectations for second- and third-quarter mortgage production. Refinance and purchase trend lines are moving inversely.
Residential originations are expected to descend from $482 billion in the first quarter to $401 billion in the second quarter then fall to $306 billion by the third quarter.
But that outlook is better than last month’s forecast, when second-quarter volume was projected at $379 billion, and third-quarter activity was expected to be $292 billion.
The Mortgage Finance Forecast for March was issued by the Mortgage Bankers Association.
MBA sees refinances retreating from $357 billion in the first quarter to $241 billion the following three months and $141 billion in the third quarter. The prior forecast was for refinances to fall from $220 billion in the second quarter to $134 billion in the third quarter.
First-quarter refinance share of 74 percent is expected to deflate to 60 percent the following quarter and to 46 percent by the third quarter.
Purchase financing, however, is projected to climb from $125 billion in the first three months of 2013 to $160 billion in the second quarter and $165 billion in the third quarter. The trade group previously projected $159 billion in second-quarter purchase activity and $158 billion the following quarter.
For all of 2013, MBA predicts that $1.432 trillion in home loans will be originated, boosting its overall outlook from the $1.396 trillion forecasted last month.
This year’s expected refinance share of 58 percent has refinance production at $0.835 trillion and purchase financing at $0.597 trillion.
MBA trimmed its 2014 overall outlook to $1.053 trillion from $1.055 trillion predicted in February.
The refinance outlook for next year is $0.337 trillion, and the refinance share is expected to be just shy of a third.
Purchase production is predicted to be $0.716 trillion during all of 2014.
