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2014 Origination Outlook Raised

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Expectations for next year’s refinance and purchase originations have improved. While 2014’s outlook for government-insured production was also boosted, this year’s government lending forecast was lowered.

Refinance and purchase financing originations are forecasted to fall from $400 billion in the third quarter to $300 billion in the final quarter of this year. First-quarter 2014 volume is projected at $370 billion.

Although the second-half 2013 outlook was unchanged from last month, next year’s first-quarter forecast increased from $330 billion.

Freddie Mac made the predictions in its September 2013 Economic and Housing Market Outlook.

While projected refinance originations of $200 billion in the third quarter and $120 in the fourth quarter were the same as in the previous outlook, expected first-quarter 2014 refinance originations were raised to $167 billion from $149 billion.

Refinance volume was determined by multiplying Freddie’s projected refinance share by total expected originations.

Freddie also left its projection for second-half purchase production unchanged at $200 billion for the third quarter and $180 billion for the fourth quarter. But the first-quarter 2014 forecast was increased to $204 billion from $182 billion.

Freddie has Federal Housing Administration-insured originations coming in at $80 billion this quarter and $65 billion in the final three months of 2013, the same as was expected last month. But the forecast was boosted to $70 billion from $50 billion for the first three months of next year.

The full-year 2013 outlook was left intact at $1.800 trillion, with $1.116 trillion coming from refinances and $0.684 billion coming from purchase financing. The FHA forecast, however, fell to $344 billion from $350 billion.

Freddie lifted next year’s forecast to $1.350 trillion from $1.300 trillion. The refinance outlook increased to $0.554 trillion from $0.520 trillion, and the purchase outlook expanded to $0.797 trillion from $0.780 trillion. Even the FHA outlook increased, to $0.260 trillion from $0.250 trillion.

Refinance share is expected to sink from 62 percent in 2013 to 41 percent next year, while FHA share is projected to rise from 19.11 percent to 19.26 percent in 2014.

Freddie has the share of adjustable-rate mortgages at 10 percent in 2013 and 14 percent next year.

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