Freddie Mac has increased its expectations for this year’s and next year’s combined U.S. residential loan originations by $400 billion.
During the fourth quarter,
the secondary lender predicts that mortgage production by all home lenders will come in at $400 billion.
Volume is then expected to fall to $320 billion in the first quarter of next year then bounce up to $460 billion in the second-quarter 2016.
That is according to
Freddie’s November 2015 Economic and Housing Market Outlook.
The McLean, Virginia-based company raised its current-quarter forecast from $300 billion projected last month, while the first-quarter 2016 projection increased from $280 billion and the following period’s volume was up from $425 billion.
Refinances are expected to account for $200 billion of fourth-quarter 2015 activity, far more than the $135 billion forecasted last month. The first-quarter 2016 refinance outlook was lifted to $160 billion from $126 billion. The total was based on an analysis of of refinance share.
Purchase financing is now expected to reach $200 billion during the final three months of this year versus the $165 billion previously predicted, while purchases are expected to be $160 billion in the first three months of next year compared to the prior forecast of $154 billion.
Full-year 2015 business is expected to amount to $1.750 trillion, climbing from the prior projection of $1.530 trillion, and next year’s outlook increased to $1.580 trillion from $1.400 trillion.
Freddie reduced estimated refinance production for 2014 to $0.527 trillion from $0.567 trillion in its last outlook. This year’s refinances are now expected to be $0.840 trillion, up from $0.719 trillion previously predicted. The 2016 refinance outlook increased to $0.553 trillion from $0.546 trillion.
Refinance share is expected to go from 39 percent in 2014 to 48 percent this year then drop back down to 35 percent in 2016.
Last year’s estimate of purchase financing grew to $0.824 trillion from $0.783 trillion in the previous forecast. The 2015 purchase forecast rose to $0.910 trillion from $0.811 trillion, while next year’s purchase business is now expected to reach $1.027 trillion versus just $0.854 trillion last month.
Loans insured by the Federal Housing Administration are expected to account for 19.7 percent of overall 2015 originations and 20.0 percent of next year’s volume.
