Freddie Mac cuts mortgage volume forecast -- again
"Consumers are coming back" is the headline on Freddie Mac's January economic outlook report, which notes that both spending and confidence have been rising.
But a look at the accompanying financial tables provided by the company's Office of the Chief Economist shows that the giant mortgage-finance firm doesn't see the rebound spilling over into home purchases and refinancings. Quite the opposite, in fact.
In its latest downward revision, Freddie Mac estimates that mortgage originations will total $1.05 trillion this year, down from a projected $1.2 trillion last month and $1.8 trillion in January 2010.
Freddie Mac economists also greatly marked down their expectations for 2012. That figure had been holding steady at $1.6 trillion since July, but Freddie revised it to $1.15 trillion in the latest forecast, released Thursday.
Freddie Mac, the government-controlled finance firm that buys and guarantees mortgages from lenders across the nation, also more firmly wrote an end to the mini-boom in refinancings that was the dominant story in the mortgage industry last year.
Refinancings made up 69% of the total $1.55 trillion in home mortgage originations last year, but are expected to constitute just 41% this year and 35% in 2012, Freddie Mac said. The December estimate had been for 47% refinancings in 2011 and 40% in 2012.
Freddie's sister company, Fannie Mae, doesn't make public pronouncements on expected volume, a spokeswoman said. In a forecast last October, the Mortgage Bankers Assn. predicted that 2011 originations would fall below $1 trillion because of the drop in refinancings and a weak economic recovery.
Freddie Mac didn't respond immediately to a request for comment on its revisions. Numbers geeks can work their way through Freddie's fluctuating figures in the company's archive of its outlook reports.
-- E. Scott Reckard