2016 Purchase Financing Forecast Lifted, 2015 Cut

U.S. home-lending volume, including refinance originations and purchase financing, is projected to come in at $300 billion during the final three months of this year.

Mortgage originations are then forecasted to fall to $280 billion in the first-quarter 2016 followed by a surge to
$425 billion in the following three-month period.

The predictions were made by Freddie Mac in its October 2015 Economic and Housing Market Outlook.

Based on refinance share provided by Freddie, Mortgage Daily estimates that refinance production will fall from $135 billion in the fourth-quarter 2015 to $126 billion three months later.

That was more than Freddie projected in last month’s forecast, when it had refinance originations going from $120 billion this quarter
to $112 billion in the first quarter of next year.

At the same time, the fourth-quarter 2015
purchase outlook fell to $165 billion from $180 billion, while the following quarter’s purchase financing estimate was lowered to $154 billion from $168 billion.

Full-year 2015 total production, including refinances and purchases, are expected to be $1.530 trillion. Next year’s total is forecasted at $1.400 trillion.

Freddie trimmed this year’s refinance forecast to $0.719 trillion from $0.734 trillion that was expected last month.
The 2016 refinance outlook, however, increased to $0.546 trillion from $0.420 trillion.

Freddie expects refinance share to go from 47 percent in 2015 to 39 percent next year.

Purchase production is expected to be $0.811 trillion in 2015, more than the $0.796 trillion expected in the last forecast. But next year’s purchase projection was reduced to $0.854 trillion from $0.980 trillion.

Freddie estimates that government mortgage share will be 19.7 percent this year and 20.0 percent in 2016.