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Origination Estimate Increased $100 Billion

Mortgage News

The latest outlook has U.S. residential lenders originating $100 billion more this year than was forecasted last month. Behind the improved outlook was strengthening conventional business and a rising share of refinances and adjustable-rate mortgages.

Home-loan production is expected to climb from $340 billion in the first quarter to $350 billion this quarter, Freddie Mac predicted in its economic outlook released Wednesday. Last month Freddie had first- and second-quarter production each at just $320.

Fundings, however, are expected to fall to just $200 billion by the first quarter of next year.

Second-quarter refinance share of originations was raised to 63 percent from last month’s prediction of 60 percent, while the third-quarter share was increased to 55 percent from half.

The share of loans expected to be adjustable-rate this quarter leapt to 11 percent from just a 6 percent projection last month.

Full-year 2011 originations are predicted to come in at $1.2 trillion — better than last month’s forecast of $1.1 trillion. The improved outlook was the result of expanded projections for this year’s conventional business, which Freddie raised to $886 billion from $779 billion in the prior report.

Annual total volume is expected to slide to $0.9 trillion in 2012 then climb to $1.1 trillion in 2013.

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