A slightly bigger share of this year’s mortgage production is expected to be conventional loans, though the increase came at the expense of projected government business.
Residential loan production from all U.S. lenders, including conventional and government business, is predicted to be $280 billion in the fourth quarter and in the first quarter of next year.
Home lending is then expected to jump during the following three-month period — climbing to a projected $350 billion.
The forecast, made in Freddie Mac’s November 2014 Economic and Housing Market Outlook, was unchanged from October.
Based on Freddie’s expected refinance share, refinance originations are projected fall from $112 billion in the current quarter to $98 billion the following three months and $77 billion in the second-quarter 2015.
Purchase financing, however, is expected to climb from $168 billion to $182 billion in the first quarter of next year and $273 billion three months later.
For all of 2014, Freddie predicts overall originations will drop from $1.200 trillion to $1.100 trillion next year and $1.175 trillion in 2016.
Refinances are projected to account for $0.516 trillion of this year’s activity, $0.253 trillion of 2015 production and $0.176 trillion of the following year’s volume.
Refinance share is forecasted at 43 percent for this year, 23 percent next year and 15 percent in 2016.
Annual purchase production, however, is predicted to climb from $0.684 trillion during 2014 to $0.847 trillion next year and $0.999 trillion in 2016.
Freddie has government mortgage production falling from $0.239 trillion in 2014 to $0.220 trillion next year. For 2016, government originations are projected to jump to $0.247 trillion.
This year’s forecasted government originations were decreased from $0.243 trillion projected in the October outlook. The decline in expected government production was offset by a equal increase in the outlook for conventional activity.
Freddie has adjustable-rate mortgage share at 11 percent in 2014, 14 percent in 2015 and 20 percent in 2016.
