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Freddie’s Forecast Blows Away Other Outlooks

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First it was the Mortgage Bankers Association increasing this year’s origination outlook to nearly $1.3 trillion. Fannie Mae followed, pushing projected production past $1.3 trillion. Not to be outdone, Freddie Mac has now topped both forecasts by more than $100 billion.

In its June 2012 Economic and Housing Market Outlook released Tuesday, the Federal Home Loan Mortgage Corp. predicted that second-quarter residential originations by all U.S. lenders will fall to $365 billion from the first quarter’s $420 billion. But business will pick up in the third quarter to $370 billion.

While there was no change in expected second-quarter fundings from last month’s outlook, Freddie’s first-quarter estimate was increased from $380 billion, while the third-quarter projection was raised from $300 billion.

Freddie pushed up estimated first-quarter refinance originations to $315 billion from $285 billion, while expected third-quarter refinances were lifted to $241 billion from $180 billion projected a month earlier.

Even the projection for purchase production was raised for the first quarter, to an estimated $105 billion from just $95 billion last month. Projected third-quarter purchase financing was increased to $130 billion from last month’s forecast of $120 billion.

Freddie has refinance share of originations at 75 percent during the first quarter then falling each subsequent quarter this year by 5 percent.

Expected adjustable-rate mortgage share is frozen at 15 percent from the current quarter through the end of next year.

After predicting last month that full-year 2012 originations would total $1.300 trillion, the secondary lender boosted the projection to $1.450 trillion in the most recent report.

Freddie is now more optimistic than MBA, which last week forecasted 2012 industry production of $1.294 trillion, and Fannie, which today said its projection for U.S. originations this year was raised to $1.336 trillion.

Freddie’s expectations for this year’s refinance originations were increased to $0.986 trillion from $0.858 trillion, and projected purchase production was pushed up to $0.464 trillion from $0.442 trillion.

Government mortgage production is predicted to finish this year at $0.300 trillion, increasing from May’s outlook of $0.284 trillion. The outlook for conventional business grew to $1.150 trillion from $1.016 trillion.

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