Refis to make up nearly half of 2H19 mortgage volume: Freddie Mac

Freddie Mac now forecasts that refinance volume will make up nearly half of third and fourth quarter production, and has increased its origination estimate for the year to over $2 trillion.

"Despite fears of an economic slowdown, the U.S. labor market stands firm," Freddie Mac Chief Economist Sam Khater said in a press release. "Specifically, jobless claims are near historic lows. This strong labor market, along with mortgage rates at three-year lows and consumer confidence holding strong, will set the stage for continued improvement in the housing market heading into the fall."

Freddie Mac now forecasts refinance originations of $874 billion, up from $607 billion one month prior. Meanwhile it projects purchase volume of $1.17 trillion, down from $1.19 trillion in July.

In comparison, Fannie Mae's August mortgage origination forecast called for $1.84 trillion in volume this year, while the Mortgage Bankers Association is projecting $1.89 trillion.

In the third quarter, refinancings are expected to make up almost 49% of the $617 billion in originations for the quarter; in the fourth quarter, refis will have a 45% share of the $528 billion projected volume. For the year, refis should make up 43% of total volume. In its August 2018 outlook for this year, Freddie Mac projected a 24% refinance share.

Mortgage rates should average 3.6% through the second quarter of next year, before rising to 3.8% by the fourth quarter of 2020, Freddie Mac said. It now projects 2020 originations of $1.82 trillion, with purchases making up $1.22 trillion of that.

As a result of increased housing demand along with an expected increase in inventory, home sales should total 5.94 million in 2019 and grow in 2020 to 6.04 million, the forecast said.