Mortgage Daily

Published On: August 13, 2014

Expected originations for this year and next year have been reduced — impacting the outlook for both refinancing and home purchase financing.

During just the current quarter, $320 billion in residential loan originations by all U.S. lenders are projected. Volume is expected to sink to $260 billion in the fourth quarter.

While there was no change in the second-half outlook from last month’s forecast, the first-half estimate was reduced by $25 billion.

Freddie Mac made the most recent predictions in its August 2014 Economic and Housing Market Outlook.

Based on Freddie’s projected refinance share, refinance production is expected to fall from $99 billion in the third quarter to $78 billion in the final three months of the year, while purchase financing is expected to drop from $221 billion to $182 billion.

From Jan. 1 through Dec. 31 of this year, total originations are predicted to amount to $1.150 trillion, down from last month’s forecast of $1.175 trillion.

The 2015 total forecast was cut to $1.050 trillion from $1.085 trillion.

This year’s refinance projection fell to $0.426 trillion from $0.435 trillion, and next year’s was lowered to $0.231 trillion from $0.239 trillion.

Refinance share is expected to decline from 37 percent in 2014 to 22 percent next year.

Freddie has purchase financing activity rising, however, from $0.725 trillion to $0.819 trillion — though that was down from the $0.740 trillion in 2014 volume and $0.846 trillion in 2015 activity projected last month.

Adjustable-rate mortgages are forecasted to account for 12 percent of this year’s overall business and 15 percent of 2015’s overall originations.

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