Freddie Trims Origination Forecast

Freddie Mac has dropped its origination forecast for 2010 by nearly 9% to $1.6 trillion as a result of lower expectations for refinancings. In January, Freddie economists estimated that one- to four-family originations would total $1.75 trillion in 2010 with 30-year fixed rate loans averaging 5.6% over the four quarters of this year. In its latest forecast, the GSE's economists expect 30 year FRMs will average 5.4%, while hovering around 5% during the first-half of this year. With the Federal Reserve slated to stop its purchase of agency mortgage-backed securities by March 31, Freddie's forecasters see little immediate impact on rates. "We expect any impact on mortgage rates to be modest and not derail the housing recovery," said Freddie's chief economist Frank Nothaft. However, a huge jump in refinancings late in the fourth quarter prompted its economists to shift production to Q4 from the early quarters of 2010. Freddie now believes refis will total $800 billion in 2010 compared to $963 billion in the earlier forecast.