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Refis Push Mortgage Forecast Higher

Mortgage News

For the second month in a row, mortgage bankers boosted their funding forecast. A drop in the purchase-money outlook was more than offset by strengthening refinance activity.

Second-quarter residential lending by all U.S. mortgage firms will amount to around $302 billion, the Mortgage Bankers Association predicted in its Mortgage Finance Forecast.

The projection is bigger than in last month’s report, when MBA increased its Q2 outlook to $296 billion from February’s forecast of $275 billion.

The latest prediction reflected $116 billion in purchase production, lower than the $154 billion estimated last month for the second-quarter. Refinance volume projections were raised, however, to $182 billion from $142 predicted by MBA last month.

Second-half originations will fall off — bringing full-year volume in somewhere around $1.070 trillion, lower than the $1.572 trillion closed in 2010 but higher than the $0.966 trillion expected for next year.

The trade group has refinance share falling from nearly two-thirds in the first three months of this year to 61 percent this quarter. But third-quarter refinance share is expected to be halved to 31 percent, while the final period of the year will see a one-quarter share.

The share of originations with adjustable rates will rise from the first quarter’s 6 percent to this quarter’s 7 percent — where it is expected to remain indefinitely.

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