Fannie’s Refinance Forecast Improves

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A minor reduction in expected purchase originations was more than offset by Fannie Mae’s increased expectations for refinance originations.

Fannie raised its overall first-quarter production forecast for all U.S. originators to $269 billion from $257 billion in last month’s outlook.

Second-quarter expected mortgage production increased to $321 billion from $303 billion previously projected, and the third-quarter prediction was lifted to $307 billion from $298 billion.

The Housing Forecast: January 2015 has refinance production falling from $133 billion during the current quarter to $126 billion in the second quarter. The previous month’s outlook had refinances declining from $120 billion to $105 billion.

The secondary lender predicts that purchase financing will jump from $136 billion in the first quarter to $195 billion three months later. Fannie trimmed the purchase numbers from $137 billion for the first quarter and $198 billion for the second quarter.

Full-year total originations will climb from an estimated $1.167 trillion in 2014 to $1.181 trillion this year then inch up to $1.186 trillion in 2016.

The outlook was increased from the December 2014 forecast, when Fannie said volume would go from $1.124 trillion last year to $1.133 trillion in 2015.

Refinances are predicted to go from $0.506 trillion last year to $0.479 trillion in 2015. Fannie previously estimated that refinances would retreat from $0.452 trillion to $0.420 trillion. Next year’s refinances are expected to be $0.413 trillion.

Refinance share, according to the Washington-based firm, will thin from 43 percent in 2014 to 41 percent this year and 35 percent in 2016.

Annual purchase activity is expected to climb from $0.662 trillion last year to $0.702 trillion in 2015 then rise to $0.773 trillion next year. Fannie previously expected purchase production to increase from $0.672 trillion last year to $0.714 trillion in 2016.

Adjustable-rate mortgages accounted for an estimated 9 percent of 2014 originations and are expected to account for 8 percent of this year’s activity and 9 percent of 2016 production.

Fannie reported that mortgages outstanding are expected to grow from $9.863 trillion in 2014 to $9.953 trillion this year and $10.170 trillion in 2016.

First mortgages are expected to account for $9.188 trillion of last year’s outstandings, $9.267 trillion of outstandings in 2015 and $9.459 trillion of the 2016 total.

Mortgage Expert

Mortgage Daily Staff



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