MBA forecasts originations to drop to $1.34 trillion in 2013.

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Powered by a stronger-than-expected refi boom this year, the Mortgage Bankers Association (MBA) forecast released at MBA's annual convention anticipates 2012 full-year origination volume coming in at $1.691 trillion. That beats 2011 residential mortgage volume and also exceeds the 2013 forecast for $1.343 trillion.

MBA's research department expects the refinance share of home loan originations to average 70 percent for 2012. That share is up from 65 percent last year and also well above the refi share of 56 percent expected for next year, according to MBA.

Next year's forecast volume still skews more heavily toward refinance originations, with an expected dollar volume of refinances reaching $758 billion. That is down from the refinance dollar volume in 2012, which is forecast to total close to $1.2 trillion. The MBA forecast anticipates that overall home loan volume in 2013 will be largely driven by a spillover of refinances into the first half of the year.

The purchase volume of originations remains a wild card in the forecast, and is dependent on continued modest growth in the economy and no deeply disruptive moves to tighten credit conditions. The MBA forecast calls for purchase originations to reach $503 billion this year and to modestly increase next year to $585 billion.

MBA Chief Economist Jay Brinkmann said that MBA expects "a 16 percent increase in purchase originations in 2013 over 2012, with every quarter in 2013 exceeding the same quarter of 2012. The increase in purchase volumes will be driven by continued modest growth in the economy, an increase in owner-occupied sales financed with mortgages as opposed to cash purchases by investors, an increase in new-home sales and a small increase in average home prices."

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The regulatory environment and the outlook for possible further credit tightening by the government-sponsored enterprises (GSEs) and the Federal Housing Administration (FHA) present uncertainties that complicate the forecast for next year. With FHA's latest actuarial report due out at any moment as this issue goes to press, the expectation is that the insurance fund will show further deterioration. That is likely to prompt Congress or the administration to call for further premium hikes or other measures to boost the credit quality and financial footing of the program.

Other regulatory measures are in the works that are due out in January that could further affect credit conditions. This led...

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