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Q2 Origination Outlook Increased by Nearly $30 Billion

Mortgage News

Expectations for quarterly residential lending volume have been lifted 10 percent by mortgage bankers. All of the improvement in loan production is concentrated in the refinance category.

Second-quarter home-loan fundings by all U.S. lenders was projected last month to total $305 billion.

But this month’s outlook has the number coming in at $334 billion, rising from $318 billion estimated for the first quarter. A huge dropoff is predicted for second-half 2012 originations.

The forecast was issued by the Mortgage Bankers Association.

The Washington, D.C.-based organization’s prediction is supported by an increase in new applications during both January and February reported by the Federal Housing Administration. In addition, JPMorgan Chase & Co. reported that its new loan applications climbed to $59.9 billion in the first quarter from $52.6 billion in the fourth quarter, while Wells Fargo & Co. said home mortgage applications jumped to $188 billion from $157 billion.

Purchase business is projected to rise to $107 billion from the first quarter’s $80 billion and expand each quarter through mid-2013.

Refinance originations, meanwhile, are forecasted to slip to $227 billion in the second quarter from $239 billion.

Adjustable-rate share is expected to go from 4 percent to 5 percent then spend the second half of the year at 6 percent.

Full-year 2012 originations are predicted to fall to $1.097 trillion from $1.262 trillion in 2011 then slip further in 2013 to $1.063 trillion. This year’s projection was raised from a $1.068 trillion prediction made last month by trade group.

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