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Origination Forecast Lifted by $150 Billion

Mortgage News

The annual outlook for home-loan originations by U.S. lenders just keeps getting better. The latest improvement impacted both refinance and purchase financing. The runoff in the nation’s collective mortgage portfolio is expected to hit bottom this year as outstandings turn higher in 2013.

Residential originations by all mortgage companies are projected to be $347 billion during the third quarter, falling from $458 billion estimated for the second quarter. During the final three months of 2012, fundings are forecasted to fall to $297 billion.

But despite the declining trend, the outlook has improved since last month.

Fannie Mae’s June forecast had third-quarter business at $305 billion, declining from the second quarter’s $375 billion. Fourth-quarter production was expected to be $273 billion.

The third-quarter refinance forecast was raised to $204 billion from $169 billion, while the outlook for purchase production was pushed up to $144 billion from $136 billion.

Second-half 2012 refinance share is predicted to be 59 percent, down from 68 percent in the second quarter.

Adjustable-rate mortgages are expected to account for 6 percent of this year’s total production, the same as in 2011. But next year’s ARM share is projected to climb to 8 percent.

Full-year U.S. originations are now expected to climb from $1.362 trillion in 2011 to $1.486 trillion this year then fall to $1.155 trillion in 2013.

Last month Fannie projected that 2012 production would be $1.336 trillion then fall to $1.083 trillion next year.

Full-year 2012 refinance production is expected to be $0.981 trillion, up from last month’s forecast of $0.851 trillion. The annual projection for purchase financing was raised to $0.505 trillion from $0.485 trillion.

The Washington, D.C.-based company estimates that mortgages outstanding will fall to $10.121 trillion in 2012 from last year’s $10.268 trillion then climb next year to $10.259 trillion.

First mortgages account for $9.306 trillion of this year’s number and $9.455 trillion of the 2013 total.

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