Expectations for this year’s residential loan originations were lowered, with refinancing and purchase financing both taking a hit.
Home lending activity is expected to jump to $390 billion in the second quarter from $300 billion during the first three months of this year then retreat to $320 billion in the third quarter.
The forecast was cut from last month, when mortgage originations were projected to go from $320 billion in the first quarter to $410 billion then tumble to $330 billion in the third quarter.
The predictions were made in the May 2014 Economic and Housing Market Outlook from Freddie Mac.
Based on the refinance share in Freddie’s report, the second-quarter refinance outlook was cut to $156 billion from $164 billion, while the third-quarter projection slipped to $106 billion from $109 billion.
The current quarter projection for purchase financing was reduced to $234 billion from $246, while expected third-quarter activity fell to $214 billion from $221 billion.
Freddie has annual total production slipping from $1.250 trillion this year to $1.125 trillion in 2015. The full-year outlook was cut from $1.300 trillion for 2014 and $1.150 trillion next year.
The 2014 refinance forecast of $0.488 trillion was reduced from $0.507 trillion, while next year’s refinance outlook fell to $0.225 trillion from $0.230 trillion.
Freddie has refinance share at 39 percent this year ant 20 percent next year.
Freddie lowered this year’s purchase outlook to $0.763 trillion from $0.793 trillion, and next year’s expected purchase financing slipped to $0.900 trillion from $0.920 trillion.
The origination of mortgages insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs is expected to tumble from $0.357 trillion in 2013 to $0.250 trillion then fall further to $0.225 trillion in 2015. That puts expected government share at 18.55 percent for last year and 20.00 percent for both 2014 and 2015.
Adjustable-rate mortgages are expected to account for 12 percent of 2014 originations and 15 percent of next year’s total activity.
