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Refi Forecast Cut Nearly $100 Billion

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Nearly $100 billion has been lopped off of this year’s forecast for refinance originations, and next year’s outlook was also trimmed.

Third quarter mortgage originations, including refinances and purchase financing, are expected to total $359 billion then decline to $261 billion during the final three months of this year.

The forecast was cut from last month, when $399 billion was projected for the third quarter and $302 billion was expected for the fourth quarter.

The latest predictions were made in the Housing Forecast: July 2013 from Fannie Mae.

The third-quarter refinance outlook was lowered to $189 billion from $224 billion, while fourth-quarter refinances are now projected to be $103 billion versus $149 billion.

Fannie has refinance share falling from 53 percent this quarter to 39 percent in the fourth quarter.

The third-quarter purchase financing forecast was reduced to $170 billion from $175 billion expected in the prior outlook, but the fourth-quarter projection was raised to $158 billion from $153 billion.

Fannie expects full-year 2013 originations to come in at $1.647 trillion, cutting its outlook from $1.735 trillion in the prior forecast. The 2014 outlook fell to $1.071 trillion from $1.101 trillion.

This year’s refinances are projected to total $1.028 trillion, down from the previous outlook of $1.121 trillion. The 2014 forecast has been reduced to $0.331 trillion from $0.375 trillion.

Fannie put refinance share at 62 percent in 2013 and 31 percent next year.

This year’s projection for purchase production was pushed up to $0.619 trillion from the previous outlook of $0.613 trillion, and next year’s forecast increased to $0.741 trillion from $0.726 trillion.

This year is expected to end with $10.018 trillion in outstanding mortgages. Next year’s outstandings are projected at $10.223 trillion.

The first-lien portion of outstandings is $9.274 trillion for 2013 and $9.484 trillion for next year.

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