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Mortgage Bankers More Optimistic About Refi Originations

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For three consecutive months now, mortgage bankers have raised their forecast for this year’s refinance originations while maintaining their outlook for purchase production.

Residential loan originations, including refinances and purchase financing, are expected to total $494 billion during the three months ended June 30 then retreat to $296 billion in the third quarter.

The second-quarter forecast was raised from last month, when expected home loan originations for the period were $452 billion.

The predictions were made this week in the MBA Mortgage Finance Forecast from the Mortgage Bankers Association.

Refinances are projected to account for $331 billion of second-quarter production and $136 billion of third-quarter activity. Last month’s outlook had second-quarter business at just $289 billion.

The trade group lifted its forecast for second-quarter refinance share to just over two-thirds from less than two-thirds in the previous outlook, while third-quarter refinance share was unchanged at 46 percent.

On purchase financing, MBA left its second-quarter forecast at $163 billion and its fourth-quarter outlook at $160 billion.

Full-year total originations are now predicted to reach $1.520 trillion versus the $1.478 trillion expected by MBA in April.

The annual improvement reflected an increase in projected refinance volume to $0.928 trillion from the $0.886 trillion previously forecasted. The outlook for purchase originations was left unchanged at $0.592 trillion.

MBA has increased its refinance forecast for 2013 each month since February, when the annual projection was just $0.808 trillion.

Next year’s total forecast of $1.091 trillion — including $0.388 trillion in refinance transactions and $0.703 trillion in purchase financing — was the same as was predicted in April.

The 2013 refinance share of 61 percent was 1 percentage point more than in the previous report. But next year’s expected refinance share of 36 percent was the same as previously forecasted.

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