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Freddie Mac cuts mortgage volume forecast -- again

January 14, 2011 | 11:19 am

"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.

Freddie_Mac 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