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Freddie Cuts 2014 Origination Forecast

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The Federal Home Loan Mortgage Corp. reduced its estimate of last year’s industry-wide originations and lowered its expectations for this year ‘s activity.

In its January 2014 Economic and Housing Market Outlook, Freddie Mac has residential loan originations from all U.S. lenders jumping from $350 billion in the first three months of this year to $425 billion then retreating to $333 billion in the third quarter.

Last month, the secondary lender predicted that first quarter volume would be $383 billion, rise to $453 billion and come in at $332 in the third quarter.

Based on Freddie’s projected refinance share, the first-quarter refinance forecast was cut to $154 billion from $169 billion, and the second-quarter outlook was lowered to $170 billion from $181 billion.

Freddie reduced its first-quarter projection for purchase production to $196 billion from $214 billion, and the second quarter forecast fell to $255 billion from $272 billion.

Mortgage originations insured by the Federal Housing Administration and guaranteed by the Department of Veterans Affairs are expected to reach $70 billion in the first quarter versus the $77 billion previously projected. Freddie cut its second-quarter forecast for government mortgages to $85 billion from $91 billion.

From Jan. 1, through Dec. 31 of this year, Freddie expects $1.350 trillion in total home loan originations. The forecast was lowered from $1.410 trillion expected in the last report.

The 2015 total projection was left at $1.190 trillion.

Freddie reduced its estimate of total 2013 refinance originations to $1.140 trillion from $1.178 trillion predicted in December. This year’s refinance forecast fell to $0.513 trillion from $0.564 trillion, and next year’s is still forecasted at $0.238 trillion.

Freddie reduced estimated 2013 refinance share to 60 percent from 62 percent. This year’s share was lowered to 38 percent from 40 percent, and next year’s share was left at 20 percent.

However, Freddie raised its estimate of 2013 purchase financing to $0.760 trillion from $0.722 trillion but trimmed this year’s projection to $0.837 trillion from $0.846 trillion. There was no change for the 2015 purchase outlook of $0.952 trillion.

FHA and VA originations are expected to total $0.270 trillion this year versus the $0.282 trillion expected in the previous outlook. Next year’s expected government originations were left at $0.238 trillion.

Government share is projected at 20 percent both in 2014 and 2015.

Freddie expects adjustable-rate mortgages to account for 12 percent of 2014 activity and 15 percent of 2015 originations.

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