The forecast for 2012 residential loan originations by all U.S. lenders has been raised each month since October, and this month was no exception. This year’s mortgage outlook now stands nearly $350 billion higher than it did seven months ago, and if the trend continues — annual activity could exceed last year’s production.
Second-quarter originations are projected to come in at $361 billion, off from $384 billion during the first-three months of 2012. Last month’s outlook had fundings falling to $349 billion from the first quarter’s $375 billion.
The improvement was primarily with refinances, which are expected to total $227 billion this quarter versus first-quarter refinance volume of $291 billion. The previous forecast was for refinance production to fall to $214 billion from $286 billion.
Fannie Mae made the predictions in its Housing Forecast: May 2012.
Projected second-quarter refinance share was raised to 63 percent from 61 percent expected last month.
The production of home-purchase financing is expected to jump to $135 billion from the first quarter’s $93 billion. In the April forecast, Fannie predicted purchase activity would rise to $135 billion from $89 billion.
The share of applications represented by adjustable-rate mortgages is expected to be 6 percent each quarter of this year and next year. Fannie previously had ARM share at 7 percent for the second- and third-quarters of 2012.
Full-year 2012 originations will total $1.306 trillion, slipping from 2011’s fundings of $1.362 trillion. Fannie increased its outlook for this year’s annual fundings from $1.255 trillion predicted in the prior report and has raised it each month since October — when 2012 production was expected to total just $0.958 trillion.
In 2013, $1.072 trillion in residential fundings are expected.
This year’s refinances are forecasted to be $0.831 trillion versus the previous prediction of $0.787 trillion. Expected refinance share was raised to 64 percent from 63 percent.
Annual purchase production is pegged at $0.475 trillion, also more than the prior forecast when home-purchase financing was expected to amount to $0.468 trillion.
Total mortgage debt outstanding, which finished 2011 at $10.291 trillion, is forecasted to finish 2012 at $10.244 trillion. By the end of next year, outstanding mortgage debt is expected to reverse the declining trend and climb to $10.333 trillion.
Fannie has the first-lien portion of outstanding debt slipping from $9.418 trillion at the end of last year to $9.409 trillion in the fourth-quarter 2012 then increasing to $9.511 trillion at the end of 2013.