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Fannie Cuts 2014, 2015 Purchase Financing Forecast

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Fannie Mae has lowered its expectations for this year’s and next year’s purchase originations. While the 2015 refinance forecast was also cut, the 2014 refinance outlook improved.

Fannie predicted last month that residential loan originations from all U.S. lenders, including refinancing and purchase financing, would come in at $311 billion in the third quarter then fall to $264 billion during the final three months of this year.

But this month’s projection from the secondary lender has current quarter activity higher at $317 billion and fourth-quarter production lower at $254 billion.

The Washington, D.C.-based company presented the numbers in its Housing Forecast: July 2014.

Fannie trimmed it third-quarter purchase outlook by $3 billion to $203 billion and its fourth-quarter projection by the same amount to $182 billion.

The third-quarter refinance forecast, however, was raised to $114 billion from $105 billion expected last month, and the fourth-quarter refinance projection fell to $72 billion from $79 billion.

From Jan. 1 through Dec. 31, Fannie has total mortgage originations coming in at $1.125 trillion versus the $1.130 trillion predicted last month. The 2015 forecast fell to $1.097 trillion from $1.119 trillion.

The purchase portion of the 2014 projection was down $0.010 trillion from the June forecast to $0.697 trillion, while next year’s purchase financing is now expected to come in at $0.808 trillion compared to $0.826 trillion previously expected.

Fannie raised this year’s refinance forecast to $0.429 trillion from $0.423 trillion, but next year’s forecast fell $0.004 trillion to $0.289 trillion.

Refinance activity is based on a 36 percent expected refinance share for 2014 and a 26 percent share next year.

Ten percent of this year’s originations are expected to be adjustable-rate mortgages, while ARM share is expected to jump to 13 percent next year.

Fannie estimates that mortgages outstanding will be $9.942 trillion this year and $10.069 trillion in 2015.

The first mortgage portion of 2014’s outstandings is $9.258 trillion, while it is $9.383 trillion of next year’s book.

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