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Purchase Volume Forecast Lowered

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Mortgage Daily

                                                 July 24, 2011

The outlook for purchase-money originations during the second half has been lowered by Fannie Mae, though the projection for refinances inched higher.

Total residential originations by U.S. mortgage bankers will fall from $237 billion in the third quarter to $181 billion during the final three months of 2011, Fannie said in its July outlook. In its prior forecast, production was predicted to fall from $232 billion to $192 billion.

The latest estimates represent a net second-half reduction of $6 billion.

The deterioration was with purchase-money production, which is expected to decline from $145 billion this quarter to $116 billion in the fourth quarter versus a reduction from $147 billion to $120 billion in the prior report.

Refinances will fall from $93 billion in the current quarter to $65 billion in four the fourth quarter. Last month’s forecast had refinance originations falling from $85 billion to $72 billion.

Annual U.S. production is expected to drop from $1.512 trillion last year to $1.070 trillion in 2011 then fall to $0.999 trillion next year. The forecast is $1.275 trillion for 2013.

The prior outlook from the secondary lender had this year’s total fundings the same at $1.070 trillion, but projected 2012 volume was higher at $1.012 trillion.

For all of 2011, the refinance outlook was raised to $573 billion from $565 billion, while the refinance share was pushed up to 54 percent from 53 percent.

The full-year purchase projection, however, was trimmed to $497 billion from $505 billion.

Total mortgages outstanding are expected to decline from $10.478 trillion in the second quarter to $10.374 trillion this quarter and continue contracting to $10.256 trillion in the final period of this year.

The third-quarter total outstanding figure reflected $9.480 trillion in first mortgages, and fourth-quarter outstandings included first mortgages of $9.376 trillion.

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