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2nd Half Refi Outlook Reduced

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Even as the estimate of second-quarter refinance originations was lifted 15 percent, the outlook for the second half was cut by 13 percent.

Residential loan originations are expected to reach $395 billion in the third quarter, tumbling from an estimated $557 billion three months earlier. Fourth-quarter fundings are forecasted at just $290 billion.

Last month’s outlook had volume falling to $435 billion from $507 billion in the second quarter then closing out the year at $301 billion.

The latest predictions were made in Fannie Mae’s Housing Forecast: September 2013.

Fannie raised its estimate of second-quarter refinance production to $383 billion from $333 billion. But the third-quarter outlook was lowered to $215 billion from $257 billion, while the fourth-quarter projection was reduced to $128 billion from $138 billion.

Purchase financing is expected to rise from the second quarter’s $174 billion to $181 billion then retreat to $162 billion in the final three months of the year. The prediction for purchase activity was hardly changed from last month’s forecast.

Fannie’s full-year 2013 outlook for overall originations slipped to $1.745 trillion from $1.746 trillion projected in the previous outlook, and next year’s forecast fell to $1.075 trillion from $1.085 trillion.

The refinance forecast for this year fell to $1.119 trillion from $1.123 trillion projected in August. The 2014 refinance outlook was trimmed to $0.339 trillion from $0.345 trillion.

Fannie left its outlook for refinance share at 64 percent this year and 32 percent next year.

The purchase production projection for 2013 inched up to $0.625 trillion from $0.623 trillion, but the 2014 outlook slipped to $0.736 trillion from $0.740 trillion.

Around 7 percent of this year’s originations are expected to be adjustable-rate mortgages. Expected ARM share jumps to 11 percent for 2014.

Fannie has estimated outstanding mortgages climbing from $10.008 trillion in 2013 to $10.220 trillion next year.

First mortgages are predicted to account for $9.265 trillion of this year’s outstandings and $9.482 trillion of the 2014 total.

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