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Q4 Purchase Projection Pared, Refi Forecast Expanded

Mortgage News

The good news is that the latest outlook for refinance originations during the current quarter has been increased. The bad news is that purchase production will be less than previously expected. The net effect is a better-than-expected finish for the year.

Residential originations from all U.S. lenders are expected to reach $398 billion during the fourth quarter.

The forecast, released Tuesday by Fannie Mae, was raised from $362 billion predicted last month.

The boost in expected activity was the result of rising refinances, which are now predicted to come in at $310 billion in the fourth quarter versus the $270 billion projected in last month’s report.

But the secondary lender reduced its fourth-quarter outlook for purchase production to $89 billion from $91 billion.

During the first three months of 2012, Fannie has overall production falling to $276 billion, the same as forecasted in November.

Home-loan fundings are expected to total $1.361 trillion this year, then fall to $0.991 trillion in 2012 and $0.987 trillion in 2013.

Fannie expects refinance share of production to fall from 78 percent this quarter to 70 percent in the first-quarter 2012. Refinance share is expected to be around half or less during the rest of next year.

Total mortgage debt outstanding is expected to finish 2011 at $10.283 trillion then fall to $10.152 trillion by the end of next year.

The total as of the end of 2013 was projected to reach $10.055 trillion. Fannie raised its expectations from last month, when loans outstanding as of Dec. 31, 2013, were only expected to be $9.978 trillion.

First liens are expected to account for $9.413 trillion of the Dec. 31, 2011, total.

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