The latest economic forecast from the Federal National Mortgage Association has a stronger outlook for this year’s residential loan originations. It was the 13th consecutive month that the 2013 outlook improved. The secondary lender, which finances roughly half of U.S. mortgage originations, expects mortgages outstanding to reverse a decline and climb past $10 trillion next year.
Residential production by all U.S. lenders is expected to total $456 billion during the first quarter, dropping from $584 billion in the final three months of 2012. Last month’s economic outlook from the Washington, D.C.-based firm had volume falling from $532 billion to $435 billion.
Originations are then expected to inch up to $460 billion before retreating to $383 billion in the third quarter. The previous prediction was for volume to fall from $440 billion in the second quarter to $376 billion.
The projection for first-quarter refinance activity was raised to $337 billion from $321 billion, while the second-quarter outlook was lifted to $275 billion from $266 billion.
Fannie Mae has refinance share falling from 74 percent to the second quarter’s 60 percent, the same as predicted in the December’s report.
The forecast for the volume of loans to finance home purchases was boosted to $119 billion for the first quarter from $114 billion, and the second-quarter purchase outlook was increased to $185 billion from $174 billion.
Overall full-year 2012 mortgage originations, which last month were expected to finish at $1.871 trillion, are now estimated at $1.921 trillion. In fact, Fannie has increased its overall annual outlook for last year each month since October 2011, when the government sponsored enterprise predicted $0.958 trillion in 2012 production
The expanded outlook reflected an upward revision to 2012’s estimated refinances from $1.353 trillion to $1.403 trillion and an unchanged $0.518 trillion for purchase volume.
This year’s expected total volume was increased from $1.551 trillion to $1.603 trillion. The 2013 projection has been lifted each month since December 2011, when just $0.987 trillion was forecasted.
The 2013 refinance projection was increased from $0.956 trillion to $0.961 trillion, and the purchase projection was raised from $0.595 trillion to $0.642 trillion
During 2014, Fannie forecasts total originations of $1.165 trillion, including $0.727 trillion in purchase originations and $0.438 trillion in refinances.
Refinance share is projected to fall from 73 percent last year to 60 percent in 2013 and 38 percent next year.
Mortgages outstanding finished 2012 at an estimated $9.938 trillion and are expected to fall to $9.855 trillion this year. But outstandings are forecasted to grow to $10.076 trillion in 2014.
First-mortgage outstandings are estimated to account for $9.156 trillion of 2012 outstandings, while Fannie projects the share will be $9.101 trillion this year and $9.326 trillion in 2014.