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2013 Purchase Originations to be Highest in 4 Years

Mortgage bankers predict that the volume of next year’s home-purchase financing will be the highest it has been in four years. Projections were raised for overall annual originations.

Residential originations, including refinance transactions and purchase financing, are projected to reach $511 billion during the fourth quarter.

Business is then expected to fall to $489 billion in the first quarter of next year and decline each of the remaining quarters during 2013.

The Mortgage Bankers Association, which produced the statistics, predicted last month that U.S. production would fall from $507 billion in the fourth quarter to $431 billion in the first three months of 2013.

MBA has refinance originations going from $388 billion this quarter to $362 billion in the first-quarter 2013. Last month’s forecast had refinances falling from $388 billion to $306 billion.

Refinance share is forecasted to drop from three-quarters during the current period to 74 percent in the first-quarter 2013 then continue falling almost every quarter through the end of 2014 — when the share is expected to be just 31 percent.

Purchase production is projected to push higher, however, from $123 billion in the final quarter of 2012 to $127 billion the following period. The trade group previously predicted that purchase production would increase from $119 billion to $125 billion.

MBA expects the share of adjustable-rate mortgages will come in at 6 percent this quarter and in the first quarter then spend then next six quarters at 7 percent.

The forecast for full-year 2012 production was lifted to $1.750 trillion from $1.746 trillion, while next year’s projection increased to $1.410 trillion from $1.343 trillion.

MBA also raised the outlook for 2014 to $1.061 trillion in home-loan fundings from $1.053 trillion.

Refinances will account for $1.247 trillion of 2012 production and $0.818 trillion of 2013 originations.

Purchase financing, meanwhile, will rise from $0.503 trillion in 2012 to $0.592 trillion next year — the best year since 2009, when purchase production was $0.700 trillion.

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