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.