The estimate of last year’s purchase financing was lifted nearly 15 percent, this year’s outlook has been raised by more than a quarter, and next year’s forecast has increased by nearly a third — and that was on top of an improved outlook for refinance production. While government share has been reduced, expectations for total government volume are greater.
The latest forecast for overall fourth-quarter residential originations has been pushed up to $530 billion from $390 billion predicted in September. First-quarter 2013 production is now forecasted at $440 billion versus last month’s prediction of $320 billion.
Included in the fourth-quarter numbers were $180 billion in purchase-money mortgages, up from $117 billion expected a month ago. Purchase production expected in the first quarter of next year is now at $145 billion versus the $96 billion prediction in the earlier forecast.
The data were derived from the October 2012 Economic and Housing Market Outlook released from Freddie Mac.
Refinance volume is expected to go from $350 billion in the fourth quarter to $295 billion during the first three months of 2013. Last month, expectations were for refinances to be $273 billion in the fourth quarter and $224 billion in the three months ended March 31, 2013.
Increased expectations for refinance volume came even as expected refinance share was lowered to 66 percent in the fourth quarter from 70 percent and reduced to 67 percent from 70 percent for the first quarter of next year.
Freddie raised its projection for fourth-quarter government originations to $106 billion from $89 billion, while the first-quarter 2013 government forecast increased to $83 billion from $74 billion.
At the same time, Freddie’s data indicate that government share of U.S. production was lowered from 23 percent in the fourth quarter to 20 percent and cut from 23 percent for the first-quarter 2013 to 19 percent.
Freddie revised its estimate of full-year 2011 originations to $1.500 trillion from $1.425 trillion reported just last month. This year’s forecast was raised to $2.000 trillion from $1.750 trillion, and the 2013 outlook increased to $1.650 trillion from $1.300 trillion. Full-year 2014 activity is predicted to total $1.200 trillion.
Refinance business is expected to be $1.400 trillion this year and $0.990 trillion in 2013, while purchase volume is projected to rise from $0.600 trillion to $0.660 trillion.
Full-year government originations are forecasted to fall from $0.400 trillion in 2012 to $0.330 trillion next year.
