This year’s and next year’s refinance outlook was raised by more than $200 billion, pushing the overall 2016 forecast to $2 trillion for the first time in four years.
Including mortgage refinances and home purchase financing, residential loan originations during the third-quarter 2016 are expected to come in at $595 billion.
U.S. mortgage production is then projected to fall to $485 billion in the final-three months of this year and $340 billion during the first-three months of next year.
Those predictions were made by Freddie Mac in its August 2016 Economic & Housing Market Forecast.
The secondary mortgage lender
raised its current-quarter forecast from $490 billion expected in last month’s forecast, while the fourth-quarter outlook increased from $435 billion.
But the first-quarter 2017 projection was lowered from $390 billion.
Based on Freddie’s projected refinance share, third-quarter 2016 refinances are expected to reach $298 billion, more than $235 billion expected in July, while the fourth-quarter projection increased to $228 billion from $196 billion.
Purchase financing, meanwhile, is forecasted to be $298 billion this quarter versus $255 billion in the prior outlook, and the fourth-quarter forecast grew to $257 billion from $239 billion.
For all of this year, Freddie expects mortgage originations to total $2.000 trillion, more than the $1.825 trillion expected in the last forecast. It would mark the first time since 2012 that home lending reached $2 trillion.
Next year’s overall outlook was raised to $1.650 trillion from $1.550 trillion.
Refinances are expected to account for $1.000 trillion of the 2016 total, more than the $0.894 trillion expected in July. The 2017 refinance outlook grew to $0.594 trillion from $0.496 trillion.
The latest refinance numbers were based on a 50 percent refinance share for this year and a 36 percent share in 2017.
The purchase financing forecast for 2016 was also lifted to $1.000 trillion from $0.931 trillion last month. Next year’s purchase-money outlook is $1.056 trillion, little changed from $1.054 trillion in July.
Based on Freddie’s expected government originations, loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs are projected to account for 21.5 percent of this year’s business and 23.8 percent of the 2017 total.
