While U.S. home-loan production is expected to tumble by more than a quarter this year, next year’s outlook is even more grim. Apparent delays in quarterly closings ended up causing some business to be shifted to a subsequent period.
The country’s collective residential originations are projected to fall to $391 billion this quarter from $404 billion in the second quarter, according to Fannie Mae’s latest forecast released today. The Washington, D.C.-based secondary lender raised its third-quarter forecast from $325 billion predicted last month, while its second-quarter estimate was cut from $451 billion.
The revisions suggest recent fundings took longer than expected — pushing some of the business into the subsequent period.
Volume is expected to tumble to $295 billion in the fourth quarter.
Refinances are forecasted to account for 57 percent of third-quarter production, higher than 54 percent in the second quarter. In the final period of this year, refinance share is expected to drop to 47 percent.
Based just on loan applications, the share of adjustable-rate mortgages is estimated at 5 percent this quarter, lower than the second quarter’s 6 percent. But ARM share is predicted to increase back to 6 percent in the fourth quarter.
For all of 2010, Fannie has U.S. originations falling to $1.397 trillion from $1.922 trillion last year. Next year’s outlook is even worse at $1.130 trillion.
Fannie’s outlook for 2011 was slashed from its projection of $1.559 trillion last month.