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Refinance Production Jumps

Mortgage News

Quarterly refinance originations are projected to jump by nearly a third. But mortgage debt outstanding is continuing a decline.

U.S. mortgage originations are projected to reach $526 billion during the fourth quarter, according to an economic forecast released today by Fannie Mae. Projected production is higher than $444 billion in the third quarter and $284 billion in the fourth-quarter 2008.

Refinance share of originations is predicted to rise to 62 percent from the third quarter’s 56 percent. Fourth-quarter refinance production is projected rise to $326 billion from $247 billion.

Fannie expects adjustable-rate mortgages to account for 7 percent of fourth-quarter loan applications, up from the third quarter’s 6 percent. ARM share is expected to rise to 9 percent by the third-quarter 2010.

For all of this year, residential production is expected to rise to $1.951 trillion from $1.479 trillion in 2008. Next year, mortgage bankers are forecasted to fund $1.384 trillion.

In 2007, U.S. home loan production was $2.352 trillion.

Mortgage debt outstanding has been on the decline, to $10.811 trillion in the third quarter from $10.951 trillion the prior quarter. Mortgage debt outstanding stood at $11.004 trillion last year and $11.113 trillion in 2007.

The figure is expected to decline to $10.790 trillion during the current quarter then $10.611 trillion next year.

Included in fourth-quarter mortgage debt outstanding is $9.725 trillion in first liens, lower than $9.890 trillion last year and $9.983 trillion the year before. By next year, first mortgages outstanding are projected to fall to $9.563 trillion.

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