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Forecast for Refi Share Bumped

Mortgage News

The share of the current quarter’s originations expected to be for refinances has been increased by mortgage bankers — helping to push overall quarterly production marginally higher. But the outlook for purchase activity was pulled back — dragging down overall annual activity.

Residential originations during the third quarter are expected by the Mortgage Bankers Association to come in at $255 billion. The projection is slightly higher than the $252 billion forecasted last month.

But the trade group cut its fourth-quarter outlook to $171 billion from $181 billion.

MBA’s projection for second-half 2011 purchase transactions was scaled back to $205 billion from $222 billion in last month’s forecast.

At the same time, expectations for refinance originations during the same time frame were raised to $221 billion from $211 billion.

MBA has refinance share at 60 percent this quarter, raising it from 55 percent in the prior report. The share is expected to be 40 percent in the fourth quarter and around a quarter during each period next year.

The outlook for full-year 2011 originations was trimmed to $1.018 trillion from $1.025 trillion in the prior forecast.

Next year, the association expects originations to come in at $960 billion.

The share of production that will be adjustable-rate is forecasted at 7 percent each quarter of this year and 6 percent each quarter during 2012.

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