Mortgage bankers have improved their outlook considerably for fourth-quarter residential originations. Full-year 2010 production estimates were raised by more than $100 billion.
In October, home-loan production was projected to tumble to $248 billion in the fourth quarter by the Mortgage Bankers Association. Third-quarter volume was estimated at the time to have been $399 billion.
But in its December mortgage finance forecast, the trade group raised its fourth-quarter projection to $395 billion. Third-quarter volume was revised to $401 billion.
For all of 2010, MBA predicts that originations will reach $1.505 trillion, up from its October estimate of $1.401 trillion. Last year’s fundings were $1.995 trillion, while the latest forecast has volume plummeting to $0.967 trillion next year and $0.981 trillion in 2012.
The forecasted refinance share for the fourth quarter is 74 percent, the same as the third quarter. After falling to 56 percent in the first quarter of next year, the refinance share is expected to dwindle to one-quarter in the second-half 2011.
The ratio of adjustable-rate mortgages, however, his expected to go from 5 percent this quarter to 7 percent by the second quarter of next year.