Despite a 50-basis-point increase in expected long-term mortgage rates during the first half of next year, the reduction to forecasted originations was modest.
From Oct. 1, 2016, through Dec. 31, single-family loan originations, including purchase financing and refinancing, are projected to come in at $484 billion.
Residential lending activity is then expected to tumble to $355 billion in the first quarter of next year and bounce up to $431 billion during the following quarter.
Fannie Mae, which made the predictions in its Housing Forecast: December 2016, raised its fourth-quarter 2016 outlook from $470 billion expected last month, while the first-quarter 2017 forecast was lowered from $358 billion and the following period’s projection declined from $438 billion.
The reduction to the first-half 2017 forecast was fairly modest given that Fannie now expects 30-year fixed rates to average 4.1 percent in the first-half 2017 compared to just 3.6 percent that was expected in the November forecast.
The latest outlook has current-quarter purchase financing at $248 billion, off from $250 billion previously predicted. But the first-quarter 2017 purchase outlook inched up to $191 billion from $190 billion.
Fannie expects refinance originations to total $236 in the final-three months of this year, more than $220 billion projected in October. The following quarter’s refinance outlook was trimmed to $164 billion from $169 billion.
For all 12 months of this year, Fannie expects total originations to amount to $1.904 trillion, more than the $1.875 trillion it expected last year. The 2017 forecast fell to $1.573 trillion from $1.607 trillion, and the following year’s outlook dipped to $1.530 trillion from $1.538 trillion.
The 2016 purchase financing projection was trimmed $0.002 trillion to $1.013 trillion. Next year’s purchase outlook was shaved by $0.001 trillion to $1.053 trillion, and the 2018 forecast was reduced to $1.149 trillion from $1.152 trillion.
But Fannie boosted current-year projected refinance production to $0.890 trillion from $0.860 trillion predicted in November. The 2017 refinance outlook was cut to $0.520 trillion from $0.553 trillion, and 2018 refinance originations are now expected to reach $0.381 trillion versus $0.386 trillion in the last report.
Fannie expects refinance share to sink from 47 percent in 2016 to a third next year and a quarter in 2018.
