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Fannie Lifts Refi Outlook

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Despite an environment of rising rates, the latest mortgage finance forecast from Fannie Mae has refinance originations coming in nearly $100 billion more this year than in its last forecast. Even next year’s refinance outlook was lifted.

Overall residential originations at primary lenders, including purchases and refinances, are expected to fall from $507 billion in the second quarter to $435 billion in the current period , the secondary lender predicted in its Housing Forecast: August 2013. A further decline to $301 billion is expected in the final three months of 2013.

In its July outlook, Fannie had mortgage production dropping from $566 billion to $359 billion this quarter and $261 billion in the fourth quarter.

Refinances are expected to fall from $333 billion to $257 billion during the third quarter and $138 billion in the fourth quarter versus Fannie’s prior projections that volume would go from $384 billion to $189 billion then close out the year at $103 billion.

Fannie’s outlook is for purchase financing to rise from $174 billion to $178 billion this quarter then recede to $163 billion. Last month’s forecast had purchase production dropping from $183 billion to $170 billion in the third quarter and $158 billion in the fourth quarter.

The full-year 2013 origination outlook increased to $1.746 trillion from $1.647 trillion in the previous report, while next year’s forecast improved to $1.085 trillion from $1.071 trillion.

The refinance portion of this year’s projection is $1.123 trillion, up from $1.028 trillion expected in the last outlook. The 2014 refinance outlook was raised to $0.345 trillion from $0.331 trillion.

Fannie has 2013 refinance share at 64 percent and next year’s refinance share at just 32 percent.

Expected purchase production for this year inched up to $0.623 trillion from $0.619 trillion, while the 2014 forecast slipped to $0.740 trillion from $0.741 trillion.

The Washington, D.C.-based company forecasts that adjustable-rate mortgages will account for 7 percent of total 2013 applications and 11 percent of next year’s activity.

Estimated residential loans outstanding are expected to climb from $10.032 trillion this year to $10.244 trillion in 2014.

The first mortgage portion of outstandings is projected to rise from $9.287 trillion in 2013 to $9.504 trillion next year.

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