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.