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2012/2013 Origination Outlook Eases

Mortgage News

Expectations for next year’s originations have been trimmed, as have 2013’s.

Third-quarter residential originations are expected to fall to $300 billion from the second quarter’s $350 billion based on Freddie Mac’s July 2011 Economic and Housing Market Outlook. Fourth quarter production is pegged at just $210 billion.

There was no change from the secondary lender’s forecast last month.

Conventional business is expected to account for $210 billion of this quarter’s business, while government fundings are expected to come in at $90 billion.

Full-year originations are predicted to land at $1.200 trillion, down from last year’s $1.550 trillion. Business will fall even further next year — to $0.850 trillion — then rise the following year to $1.000 trillion.

June’s outlook had 2012’s volume at $0.900 trillion then increasing to $1.100 trillion in 2013.

The share of production that will be for adjustable-rate mortgages is estimated at 11 percent in the second and third quarters. Fourth-quarter ARM share is expected to be 10 percent. But ARM share is expected to increase to 12 percent during the first nine months of 2012.

At 68 percent in the second quarter, refinance share of production edged down from the first-quarter’s 70 percent. Freddie predicts second-half 2011 refinance share to fall further — to 55 percent this quarter and 45 percent in the fourth quarter.

The previous forecast had second-quarter refinance share lower at 63 percent. But fourth-quarter refinance share came in higher this time around versus exactly half that was previously predicted.

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