The outlook for first-half 2011 originations by all residential lenders has been reduced more than $60 billion by the Federal National Mortgage Association. But a rebound is projected for 2013. The forecast has nearly one-in-five borrowers opting for an adjustable-rate mortgage by the end of next year.
First-quarter home-loan fundings by all U.S. lenders will tumble to $264 billion from the fourth-quarter 2010’s estimated $448 billion in originations, Fannie Mae forecasted in its January 2011 Housing Forecast.
Fannie cut its first-quarter forecast from $288 billion predicted last month, while its second-quarter 2011 forecast was lowered to $260 billion from $302 billion projected last month.
Refinance share is expected to drop to 59 percent from 73 percent in the fourth quarter then plummet to 31 percent by the second quarter of this year.
The ARM share of new applications will climb from the fourth quarter’s 5 percent to 8 percent then jump to 12 percent by the second quarter, the report said. By the end of 2012, Fannie has ARM share at 18 percent.
The outlook for full-year 2011 production was reduced to $1.035 trillion from last month’s forecast of $1.132 trillion. The following year, Fannie has $1.137 trillion in volume projected.
Production is expected to jump to $1.408 trillion in 2013.
U.S. borrowers continued to cut their debt. Mortgages outstanding ended last year at an estimated $10.575 trillion, falling from $10.861 trillion at the end of 2009. The total is expected to fall to $10.443 trillion this quarter and bottom out at $10.246 trillion in the first-quarter 2012.
First liens accounted for $9.483 trillion of the first quarter outstanding. First liens declined from $9.603 trillion at the end of last month and $9.829 trillion at the end of 2009.