Economists at the Federal National Mortgage Association have upped their expectations for originations by residential lenders during the first six months of this year.
In this month’s housing forecast from Fannie Mae, second-quarter home-loan production by U.S. lenders was projected to come in at $327 billion, up from $318 billion in the first quarter.
Last month’s prediction from the Washington, D.C.-based firm had fundings falling to $273 billion this quarter from $303 billion three months earlier.
The improved outlook was the result of refinance transactions, which are now projected to reach $408 billion during the first-half 2011 versus the $314 billion expected in last month’s report.
Fannie cut, however, its first-half forecast for purchase-money financing to $238 billion from the $261 billion expected in the prior outlook.
The latest forecast has originations sinking to $232 billion in the third quarter and just $192 billion in the fourth quarter.
The second-quarter share of refinances will fall to 57 percent from 70 percent in the first-three months of the year then retreat further to 37 percent by the third quarter.
The share of applications that are adjustable-rate will be unchanged during the final three quarters of this year at 6 percent.
For the entire year, the secondary lender expects U.S. production will fall to $1.070 trillion in 2011 from last year’s $1.512 trillion. Volume during 2012 is expected to come in at $1.012 trillion, while the following year’s activity is predicted to climb to $1.287 trillion.
Mortgages outstanding finished the first quarter at $10.458 trillion, will end this month at $10.416 trillion and will close out the year at $10.282 trillion. Included in the second-quarter total are $9.507 trillion in first liens.
