Refinance Forecast Raised

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MORTGAGE EXPERT
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The outlook was lowered for this year’s purchase financing. But a much strengthened outlook for refinance originations has 2015 on track to match last years’ mortgage originations.

Home lenders are expected to close $320 billion in the first quarter then lift volume to $350 billion three months later.

By the third quarter of this year, residential loan production is expected to settle back at $300 billion.

Freddie Mac made the predictions in its
January 2015 Economic and Housing Market Outlook.

Freddie improved its outlook from the previous forecast, which had volume going from $280 billion this quarter to $330 billion in the second quarter and $290 billion in the following three-month period.

The boost came from refinances, which are now expected to be $144 billion this quarter versus the $98 billion expected last month. The second-quarter refinance projection was lifted to $123 billion from $83 billion.

But expected purchase financing
was cut to $176 billion from $182 billion for the first quarter, and the second-quarter outlook was reduced to $228 billion from $248 billion.

Full-year 2015 total originations are forecasted to reach $1.200 trillion then climb to $1.275 trillion next year. The 2016 projection was raised from $1.175 trillion in last month’s forecast.

The 2015 refinance forecast was increased to $0.420 trillion
from the $0.275 trillion in Freddie’s last forecast. The 2016 refinance number grew to $0.306 trillion from $0.235 trillion.

Refinance share is expected to go from 35 percent this year to 24 percent in 2016.

Freddie lowered this year’s forecast for purchase financing to $0.780 trillion from $0.825 trillion, while the 2016 outlook increased to $0.969 trillion from $0.940 trillion.

Loans insured by the Federal Housing Administration and guaranteed by the Department of Veterans Affairs are expected to account for 20 percent of overall 2015 and 2016 originations.

Mortgage Expert

Mortgage Daily Staff

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