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Mortgage Bankers Lower 2014 Expectations

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The outlook for this year’s residential loan originations has been lowered. Refinancing and purchase financing were equally impacted.

Home loan production is forecasted to increase from $226 billion in the current quarter to $285 billion in the second quarter and $315 billion in the third quarter.

The first quarter outlook weakened from last month, when $258 billion in volume was expected. The second-quarter forecast was lowered from $311 billion.

The latest projections were made in the MBA Mortgage Finance Forecast released Tuesday by the Mortgage Bankers Association.

Refinance volume is predicted to come in at $111 billion in both the first and second quarters. The previous outlook had refinance activity slowing from $130 billion to $115 billion.

MBA sees purchase financing climbing from $115 billion in the first quarter to $174 billion. The purchase forecast was cut from $128 billion in the first quarter and $196 billion three months later.

Full-year 2014 originations are expected to come in at $1.116 trillion. The trade group revised this year’s forecast down from $1.174 trillion in December. Next year’s origination projection, however, was unchanged at $1.229 trillion.

“Despite an economic outlook of steady growth and a recovering job market, mortgage applications have been decreasing — likely due to a combination of rising rates and regulatory implementation, specifically the new Qualified Mortgage Rule,” MBA Chief Economist Mike Fratantoni stated in the report. “As a result, we have lowered our expectations for both purchase and refinance originations in the first half of 2014.”

This year’s refinance projection was reduced to $0.440 trillion from $0.463 trillion, while the 2015 refinance outlook was left at $0.433 trillion.

The expected refinance share is 39 percent for 2014 and 35 percent for next year.

MBA has full-year purchase financing climbing from $0.677 trillion to $0.796 trillion in 2015. The 2014 forecast was lowered from $0.711 trillion.

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