Mortgage Daily

Published On: May 18, 2016

First-quarter refinance production and government share of overall mortgage originations turned out to be better than previously thought by economists at Freddie Mac.

Total U.S. home-loan originations are projected by the secondary lender to jump from $360 billion in the first-three months of 2016 to $505 billion in the second quarter.

But then residential-lending activity is expected to drop, to $450 billion in the third
quarter, then fall even further to just $410 billion during the final-three months of this year.

The secondary lender made the predictions in its
May 2016 Economic & Housing Market Forecast.

Freddie raised its estimate of first-quarter originations from
$335 billion projected in last month’s forecast.

Based on an analysis of Freddie’s projected refinance share and total originations, estimated refinance production is expected to rise from $187 billion in the first quarter to $212 billion three months later then fall to $171 billion in the third quarter.

The first-quarter refinance estimate was lifted from $161 billion in the prior-month forecast.

Purchase financing is expected to leap from $173 billion in the first-three months of this year to $293
billion in the second quarter then retreat to $279 billion the following three months.

The first-quarter purchase outlook was trimmed by $1 billion from last month.

Freddie has government originations accounting for 24.2 percent of first-quarter originations. Government share was lifted from 20.9 percent in the last forecast.

For all of
this year, overall mortgage originations are expected to total $1.725 trillion, more than the $1.700 trillion expected last month. The 2017 outlook was left at $1.460 trillion.

The 2016 refinance projection was increased to $0.707 trillion from $0.680 trillion predicted in April. No change was made to the $0.350 trillion forecasted for next year.

Refinance share is expected to be 41 percent this year and 24 percent in 2017.

The forecast for 2016’s purchase-money production was trimmed to $1.018 trillion from $1.020 trillion in the April outlook. No change was made to the $1.110 trillion purchase forecast for next year.

Freddie has government share going from 23.2 percent in 2015 to 22.8 percent this year and 25.3 percent in 2017.

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