Within a little more than a year, government-backed mortgage closings are expected to account for one-in-four home loans that are originated in the country.
Mortgage production during the final three months of this year, including refinance transactions and purchase financing, is forecasted to come in at $400 billion.
Residential lenders are then predicted to slow volume to $320 billion during the first-quarter 2016 and push production up to $460 billion three months later.
Freddie Mac gave the projections in its December 2015 Economic and Housing Market Outlook.
The latest projections were no different that in Freddie’s forecast from November.
Based on an analysis of refinance share provided by the secondary lender, refinance originations are likely to fall from $200 billion in the current quarter to $154 billion in the first-quarter 2016 then bounce up slightly to $161 billion three months later.
Purchase financing
is forecasted to make up $200 billion of fourth-quarter 2015 production, then fall to $166 billion the following three months and surge to $299 billion in the second quarter of next year.
Full-year overall originations are expected to decline from $1.750 trillion this year to $1.580 trillion in 2016 and $1.460 trillion the following year.
Refinancing will tumble from $0.840 trillion to $0.553 trillion next year and $0.350 trillion in 2017.
That comes out to a 48 percent refinance share in 2015, a 35 percent share in 2016 and a 24 percent share in 2017.
Purchase financing, on the other hand, will climb from $0.910 trillion to $1.027 trillion in 2016 and $1.110 trillion a year later.
Freddie expects loan insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs to slip from $0.389 trillion this year to $0.375 trillion in 2016 and $0.369 trillion the subsequent year.
Despite the declining forecast, FHA/VA
share will widen from 22.2 percent in 2015 to 23.7 percent next year.
By 2017, FHA and VA loans are expected to account for 25.3 percent of all mortgages closed.
FHA share was just 17.5 percent in 2012 but has expanded each year since.
