Q4 Gov Originations to Tumble

Mortgage News

Mortgage Daily Staff

                                                 August 14, 2009

The volume of mortgages originated under government programs during the last three months of the year is expected to decline by nearly one-quarter from the current period, according to a new forecast. Fixed rates, meanwhile, are expected to climb.

In its August 2009 Economic and Housing Market Outlook, Freddie Mac predicted overall third-quarter residential originations will come in at $625 billion, declining from an estimated $675 billion in the second quarter but well above $370 billion in estimated originations in the third-quarter 2008.

The latest projections were in line with Freddie’s estimates last month.

The August outlook indicated annual originations are expected to be $2.300 trillion during 2009, higher than the $1.700 trillion in production last year and the $2.270 trillion projected for 2010.

Third-quarter volume is expected to include $125 billion in loans either insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. Government volume was an estimated $120 billion in the second quarter, and it is projected to fall to just $95 billion in the fourth quarter.

Freddie predicted that the third-quarter refinance share of applications will come in at 55 percent. In the latest Mortgage Bankers Association weekly application survey, refinances accounted for 52 percent of all 1003s.

Adjustable-rate mortgages were projected to represent just 2 percent of third-quarter business. But MBA’s most recent survey indicated ARM share was 5.8 percent.

The 30-year fixed-rate mortgage is expected to average 5.3 percent in the current quarter, up from 5.0 percent in the second quarter. Freddie reported the average 30-year at 5.29% in its Primary Mortgage Market Survey for the week ended Aug. 13.

Mortgage Daily Staff

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