Mortgage Daily

Published On: October 18, 2016

The outlook for home-lending activity from last year through next year has improved by $50 billion. Refinance and purchase financing benefited.

During the final three months of 2016, U.S. mortgage originators are expected to generate a total of $459 billion in residential loan production.

Mortgage originations are then expected to fall to $343 billion in the first quarter of next year then bounce up to $424 billion three months later.

Fannie Mae made the predictions in its Housing Forecast: October 2016.

Economists at the secondary lender raised their projections from last month, when volume was expected to fall from $439 billion in the fourth quarter to $334 billion in the first-three months of 2017 then bounce up to $428 billion in the second quarter.

Fannie trimmed its current-quarter purchase-money outlook by $1 billion to $247 billion, while the first-quarter 2017 purchase outlook dipped $2 billion to $179 billion.

Fourth-quarter 2016 refinances are now expected to reach $211 billion versus the $191 billion previously expected, and the following quarter’s refinance projection rose to $164 billion from $153 billion.

For all of 2015, Fannie increased its overall estimate
to $1.730 trillion from the previously forecasted $1.711 trillion. This year’s full-year projection grew to $1.832 trillion from $1.803 trillion, and the 2017 prediction inched up to $1.550 trillion from $1.548 trillion.

Fannie now estimates that purchase financing was $0.922 trillion last year, more than the previous estimate of $0.916 trillion. The 2016 purchase forecast was expanded to $1.012 trillion from $1.005 trillion, though next year’s expected purchase-money lending was reduced to $1.002 trillion from $1.012 trillion.

The 2015 refinance estimate increased to $0.808 trillion from $0.795 trillion, while this year’s refinance outlook grew to $0.820
from $0.797 trillion, and next year’s increased to $0.548 trillion from $0.536 trillion.

Fannie estimates that refinance share will fall from 47 percent last year to 45 percent in 2016 and 35 percent next year.

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