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Mortgage Origination Outlook Soars

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This year’s projection for mortgage originations was lifted by more than $80 billion, while next year’s forecast leapt by nearly $300 billion. Behind the improved outlook are lower interest rates.

Residential loan originations are estimated to have reached $457 billion in the third quarter. Fourth-quarter production is expected to come in at $387 billion, and first-quarter 2014 activity is predicted to total $308 billion.

The third-quarter estimate was increased from $395 billion expected last month, while the predictions for the fourth quarter and following quarter were respectively raised from $290 billion and $251 billion.

The latest projections were made in Fannie Mae’s Housing Forecast: October 2013.

Fannie lifted its third-quarter purchase financing estimate to $208 billion from $181 billion, while fourth-quarter purchase originations are now expected to reach $171 billion versus $162 billion.

The third-quarter refinance forecast was raised to $249 billion from $215 billion, and the fourth-quarter projection soared to $215 billion from just$128 billion.

Total full-year 2013 originations, which were forecasted at $1.745 trillion last month, are now expected to come in at $1.827 trillion.

The 2014 overall outlook soared to $1.358 trillion from just $1.075 trillion predicted last month.

The 2013 purchase forecast was expanded to $0.695 trillion from $0.625 trillion, and next year’s purchase outlook was lifted to $0.808 trillion from $0.736 trillion.

Refinances are now expected to total $1.132 trillion this year compared to last month’s prediction of $1.119 trillion, while the 2014 refinance projection grew to $0.550 trillion from $0.339 trillion.

Refinance share, meanwhile, is expected to fall from 62 percent this year to 40 percent in 2014.

The improvement in expected originations corresponds with Fannie’s improved outlook for 30-year fixed rates, which are projected to average 4.0 percent this year and 4.8 percent in 2014 versus last month’s prediction that the 30 year would average 4.1 percent in 2013 and 5.1 percent next year.

Fannie predicted that adjustable-rate mortgages will account for 7 percent of 2013 originations. ARM share is forecasted to rise to 10 percent next year.

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