A nearly $0.2 trillion increase in mortgage bankers’ forecast of residential originations this year now has volume exceeding production during 2011. All of the 2012 improvement is with expected refinance volume — as the forecast for home purchase financing has been cut. But a real estate market recovery is expected next year with home purchase financing projected to surge by nearly three quarters.
The estimate of total first-quarter originations was $318 billion last month. But a revised estimate this month now has first-quarter volume at $363 — in line with Mortgage Daily’s $361 billion estimate delivered earlier this month.
The previous outlook had home-loan volume falling to $334 billion in the second quarter and $225 billion in the third quarter.
Now, the Mortgage Bankers Association predicts that business will increase to $372 billion this quarter and come in at $303 billion three months later.
The improved outlook is the result of increased refinance activity — which is now expected to be $275 billion this quarter and $197 billion in the third quarter versus the $227 billion and $113 billion respectively forecasted by MBA in the prior finance forecast.
The increased refinance activity reflects a refinance share that was raised to 74 percent for the second-quarter from last month’s projection of 68 percent. The third-quarter refinance share was lifted to nearly two thirds from just half.
But the purchase outlook has diminished from MBA’s April forecast. Second-quarter purchase originations are expected to be $97 billion, and third-quarter volume is projected at $106 billion. A month earlier, the trade group predicted $107 billion for this quarter and $113 billion during the following three-month period.
MBA sees adjustable-rate mortgage share at 5 percent during the current period and 6 percent during the second half of this year — the same as was forecasted last month.
The full-year 2012 mortgage funding forecast was raised to $1.279 trillion from last month’s projection of $1.097 trillion. All of the improvement was in refinances, which are now expected to reach $0.870 trillion versus the $0.682 trillion expected in the previous report.
This year’s purchase financing forecast was trimmed to $0.409 trillion from $0.415 trillion.
In 2013, total fundings of $1.063 trillion are expected to include $0.706 trillion in purchase business and $0.357 trillion in refinances.
While there was no change from last month’s forecast, the lofty 73 percent increase in expected purchase production from 2012 to 2013 suggests that the Washington, D.C., organization sees a big recovery for the real estate market next year.