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Refis Boost Q4 Outlook

Mortgage News

The latest economic forecast has second-quarter production by U.S. lenders $20 billion under last month’s estimate. Government business was responsible for the revision. The good news is that the fourth-quarter outlook was raised — mostly as a result of revived refinance expectations.

Second-quarter residential originations by U.S. lenders were estimated at $330 billion in Freddie Mac’s August 2011 Economic Outlook.

In the July outlook, second-quarter production was estimated at $350 billion. All of the revision was attributable to a reduction in the estimated volume of loans endorsed by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs.

Mortgage Daily previously estimated that second-quarter originations finished at $260 billion.

Freddie expects third-quarter business to come in at $300 billion, the same as it projected last month. But the fourth-quarter prediction has been raised to $230 billion from $210 billion.

The stronger year-end outlook comes as projected third-quarter refinance share was lifted to 65 percent from 55 percent in last month’s forecast, and the fourth-quarter projection was increased to half from 45 percent. But refinance share is barely expected to exceed a third during each quarter of next year.

Full-year 2011 fundings are forecasted at $1.200 trillion, falling from $1.550 trillion last year. During 2012, Freddie has $0.850 trillion in originations projected, while 2013’s forecast sits at $1.000 trillion.

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