Purchase Financing Surge to Drive Q2 Home Lending

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1 · 29 · 16

The outlook for residential lending is for a 44 percent surge in originations between the first and second quarters, with purchases driving the acceleration.

Mortgage originations during the first three months of this year, including refinances and purchase financing, are expected to come in at $320 billion.

Home lending is then expected to jump to $460 billion in the second quarter then settle back to $420 billion during the following three-month period.

Those were some of the predictions made by Freddie Mac in its
January 2016 Economic and Housing Market Outlook.

The secondary lender made no changes from the previous month’s outlook.

Based on refinance share projected by Freddie, estimated refinance volume is expected to rise from $154 billion during the current quarter to $161 billion in the second quarter.

Freddie has purchase financing soaring from $166 billion in the first quarter to $299 billion three months later.

For all of 2016, total mortgage production — including refinances and home purchase financing — is expected to reach $1.580 trillion then decline to $1.460 trillion next year.

The refinance portion of this year’s business is $0.553 trillion. Refinances are projected to sink to $0.350 trillion in 2017.

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

But the outlook is for purchase financing is far brighter, with purchase originations expected to grow from $1.027 trillion in 2016 to $1.110 trillion next year.

Freddie expects loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs to account for 23.7 percent of the current year’s originations and 25.3 percent of 2017 production.

Mortgage Expert

Mortgage Daily Staff



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