All eyes are on the purchase market to see if it can hold up residential origination volumes in the second half of 2013. The big question is whether purchase lending can buttress the market so the steep drop-off in refinancings doesn't leave lenders with overcapacity.
Lenders around the country are already announcing layoffs of mortgage staff. The impact of the switch from a refi boom to a lukewarm purchase market is already being felt. But some numbers are worth examining to get a better feel for what's ahead.
In a forecast released Sept. 23, the Mortgage Bankers Association (MBA) is calling for the refinance share of residential originations to drop to 51 percent and 45 percent, respectively, in the third and fourth quarters of this year. That is down sharply from the 74 percent refinance share in the first quarter and the 66 percent share in the second.
But it's the dollar volumes that refinancing accounted for early in the year that really tell the story. In the first quarter, refinancing totaled $357 billion, according to MBA. By the fourth quarter, refis are forecast to total just $117 billion. Meanwhile, purchase volume went from $125 billion in the first quarter to an estimated $143 billion in the fourth quarter of this year. So purchase lending will come nowhere close to replacing lost...