Lunchtime Data Talk - Urban Institute · Mike Fratantoni, Mortgage Bankers Association October 16,...

Lunchtime Data Talk

Mortgage Origination—Pricing and Volume: More than You Ever Wanted to Know

Frank Nothaft, Freddie Mac

Mike Fratantoni, Mortgage Bankers Association

October 16, 2013

1

Housing Finance Policy Center

Primary Mortgage Market Survey

and Refinancing Report

Urban Institute Lunchtime Data Seminar

October 16, 2013

Frank E. Nothaft

Chief Economist

2

Office of the Chief Economist Office of the Chief Economist

Data, Data, Data

Primary Mortgage Market Survey Longest weekly national survey of rates: 42½ years and counting 30-year & 15-year FRMs, 5/1 & 1-year Treasury-indexed ARMs

Refinance Report Cash-out, Cash-in, Rate & Term Product transition: FRM vs ARM, 30-year vs shorter-term

Single-family Mortgage Originations: Science and Art Benchmark to latest HMDA Potpourri of data to estimate current-year volume

3

Primary Mortgage Market Survey (PMMS)

Freddie Mac introduced the weekly PMMS in April 1971

Business need was real-time market rates to set secondary market pricing

Today the PMMS surveys over 100 lenders (representative mix) each

week to obtain primary market quotes on 4 conventional products

30-year FRM, 15-year FRM, 5/1 Treasury-indexed Hybrid ARM, 1-year

Treasury-indexed ARM

80% LTV, prime-credit, purchase-money, conforming ($200,000)

Survey conducted Monday-Wednesday; Results released every Thursday

(day before if holiday)

http://www.freddiemac.com/pmms/

Other PMMS products include monthly Refinance Share and ARM

share of applications and annual ARM pricing survey

http://www.freddiemac.com/news/finance/tab_arm.html

http://www.freddiemac.com/news/finance/arm_archives.htm

4

Office of the Chief Economist

PMMS: Longest Weekly, National Survey of Rates

Source: Freddie Mac, Primary Mortgage Market Survey

2.0

5.0

8.0

11.0

14.0

17.0

20.0

2.0

5.0

8.0

11.0

14.0

17.0

20.0

1971 1977 1983 1989 1995 2001 2007 2013

Percent Percent

30-year Fixed-Rate

Mortgage

1-year ARM

5


6


6


PMMS Is Widely Used and Cited

The Conventional Mortgage Rate on Fed’s H.15 http://www.federalreserve.gov/releases/h15/current/

Ingredient for defining high-priced loans FFIEC’s Average Prime Offer Rate (APOR) used for determining high-priced

loans for HMDA reporting and HOEPA statements (http://www.ffiec.gov/ratespread/newcalchelp.aspx#9)

New York statute uses PMMS + 1.75% to define ‘subprime home loans’ (Banking Law §6-m)

Widely cited in media Nearly 1,000 mentions every week and many, many more tweets

6

7

Office of the Chief Economist Sources: Freddie Mac, Federal Housing Finance Agency, Mortgage Bakers Association and

HSH Associates.

Selected Contract Rates on Conforming 30-Year

Fixed Mortgages


3.0

3.5

4.0

4.5

5.0

5.5

6.0

Jan-0

9

Apr-0

9

Jul-0

9

Oct-0

9

Jan-1

0

Apr-1

0

Jul-1

0

Oct-1

0

Jan-1

1

Apr-1

1

Jul-1

1

Oct-1

1

Jan-1

2

Apr-1

2

Jul-1

2

Oct-1

2

Jan-1

3

Apr-1

3

Jul-1

3

PMMS MIRS (t-1) MBA HSH

Percent

7

Office of the Chief Economist Sources: Freddie Mac, Federal Housing Finance Agency, Mortgage Bakers Association and

HSH Associates.

Selected Fees and Points on Conforming

30-Year Fixed Mortgages


0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Jan-0

9

Apr-0

9

Jul-0

9

Oct-0

9

Jan-1

0

Apr-1

0

Jul-1

0

Oct-1

0

Jan-1

1

Apr-1

1

Jul-1

1

Oct-1

1

Jan-1

2

Apr-1

2

Jul-1

2

Oct-1

2

Jan-1

3

Apr-1

3

Jul-1

3

PMMS MIRS(t-1) MBA HSH

Percent

8

9

Office of the Chief Economist Sources: Freddie Mac and HSH Associates.

HSH Conforming 30-year Fixed Mortgage

Contract Rate Spread to PMMS


0

5

10

15

20

25

2010 2011 2012 2013

Basis Points (HSH less PMMS)

Average spread 12 basis points

9

10 10

Office of the Chief Economist Sources: Freddie Mac and HSH Associates; assumes the MBA’s conversion factor between

The contract rate and fees & points

HSH Conforming 30-year Fixed Mortgage

Effective Contract Spread to PMMS


-10

-5

0

5

10

15

2010 2011 2012 2013

Basis Points (HSH less PMMS, adjusted for points)

Average spread 0.6 basis points

10

3

4

5

6

7

8

9

Jan-0

9

Apr-0

9

Jul-0

9

Oct-0

9

Jan-1

0

Apr-1

0

Jul-1

0

Oct-1

0

Jan-1

1

Apr-1

1

Jul-1

1

Oct-1

1

Jan-1

2

Apr-1

2

Jul-1

2

Oct-1

2

Jan-1

3

Apr-1

3

Jul-1

3

Conversion Factor (“DVO1”)

MBA

MIRS

Sources: Mortgage Bankers Association, FHFA

Conversion Factor Between Fees & Points and

Interest Rate for Conforming 30-Year FRMs

11


Why are PMMS’ Contract Rates Lower Than

MBA’s?


12 12

Loan Product, Purpose, Amount, and Credit

Characteristics Explain Most of Difference


13 13

Need to Adjust for Points as Well


14 14

Adjusting for Points, Mean Difference = 5 bps


15 15

Quarterly Refinance Report

Built on “repeat transactions” loan data

Freddie Mac owns two successive first liens on house

Second transaction is a refinance

Compare the paid-off loan with the new loan

Pre- and post-loan balance (“Cash-out”, “Cash-in”, “Rate & Term”)

Pre- and post-contract rate

Pre- and post-loan products (‘product transition’)

Estimates of aggregate home equity extraction

Located at: http://www.freddiemac.com/news/finance/

16


New Mortgage Rate Lows Create Refinance

Booms

3

4

5

6

7

8

9

10

11

12

0

10

20

30

40

50

60

70

80

90

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

2001

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

1992-93

Boom 2001-04

Boom

1998

Boom

Sources: Freddie Mac’s Primary Mortgage Market Survey®.

Refinance Share of Applications

(left axis)

FRM Rate

(right axis)

2009-13

Boom

Refinance Share of Applications (Percent) 30-Year FRM Rate (Percent)


17 17

31% Shortened Loan Term When Refinancing

Source: Freddie Mac Product Transition data. Balloons are excluded from the analysis.

Percentages rounded to nearest whole number.

0%

10%

20%

30%

40%

50%

60%

70%

80%

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Shorter Term Same Term Longer Term

31%

4%

65%


18 18

15% Took “Cash-Out” At Refinance vs. 89% in

Q3 2006

Source: Freddie Mac Cash-Out Refinance Report data. Second quarter 2013.

Percentages rounded to the nearest whole number.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Cash-Out Share No Change Cash-In Share

15%

2%

83%


19 19

0

10

20

30

40

50

60

70

80

90

$0

$20

$40

$60

$80

$100

$120

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

Dollars of EquityCashed-Out (Left)

Refinance Share ofApplications (Right)

Borrowers Cashed-Out About $9 Billion When

Refinancing in 2013Q2

Source: Freddie Mac, Bureau of Labor Statistics (Consumer Price Index)

Second Quarter 2013, Equity cashed-out adjusted for inflation.

Net

Eq

uit

y C

as

hed

-Ou

t in

Refi

na

nce

of

Pri

me

Co

nve

nti

on

al

Lo

an

s (

bill

ion

s, In

20

12 d

olla

rs)

Refin

an

ce

Sh

are

of M

ortg

ag

e A

pp

lica

tion

s

(In P

erc

en

t)


20 20

Discussion of MBA Mortgage Market Data

October 16, 2013

Mike Fratantoni

Vice President, Single-family Research & Policy Development

[email protected]

Presented by

David H. Stevens President, Mortgage Bankers Association

21

Overview

For more than twenty years, MBA’s Weekly Applications Survey (or the Survey, or Weekly

Apps) has provided a timely indicator of housing and mortgage market activity. Since the

survey’s inception in 1990, its indices have been a leading indicator of housing and

mortgage finance activity.

All unadjusted indexes are set equal to 100.00 for the week of March 16, 1990.

Beginning with data from the week of September 16, 2011, released on September 21,

2011, MBA’s Weekly Applications Survey was enhanced along a number of dimensions:

• Due to recruitment of new participants, MBA estimates the survey now captures more than 75% of all retail and direct channel mortgage applications, compared to 50% previously.

• There is now significantly more detail regarding the composition of applications, including the geographic and product mix of applications.

• MBA has collected additional information regarding mortgage rates. In addition to the rates previously reported, MBA now also reports on 5/1 ARM rates and 30-year fixed rates for jumbo loans.

22

Channel Mix: Large Lenders (% of Total Production $)

Source: MBA/STRATMOR Peer Group Survey

39% 39% 40% 39%

29%22%

31%28% 27%

33%

36% 33% 33%39%

45%

33%

24%

19%

11%

11%

18% 21% 18%14%

13%

31%29%

37%

40%31%

8% 7% 9% 8%14% 13%

17% 15%

23% 25%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Direct

Corr

Broker

Retail

23

2012 Channel Mix by Peer Group

Source: MBA/STRATMOR Peer Group Survey

32%

77%

39%

80%

8%

20%

17%

36%

10%

10%

2%

23%

13%

31%

Large Banks Mid-Size Banks Large Independents Mid-Size Independents

Consumer Direct

Corr

Broker

Retail

24

Purchase Index - Historical

Source: Mortgage Bankers Association 25

Purchase Index – Recent Activity


Purchase Apps and Home Sales

•Historically, the purchase applications index has been highly correlated with

and has led home sales data by 4-6 weeks.

•In the past few years, a rising cash share of purchases, changes in the share of

applications going through the retail and consumer direct channels, and

changes in the home sales data have led to some separation. 27

Refinance Index - Historical


Refinance Index – Recent Activity


0

10

20

30

40

50

60

70

80

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

100002

00

0 -

Jan

20

00

-A

pr

20

00

-Ju

l

20

00

-O

ct

20

01

-Ja

n

20

01

-A

pr

20

01

-Ju

l

20

01

-O

ct

20

02

-Ja

n

20

02

-A

pr

20

02

-Ju

l

20

02

-O

ct

20

03

-Ja

n

20

03

-A

pr

20

03

-Ju

l

20

03

-O

ct

20

04

-Ja

n

20

04

-A

pr

20

04

-Ju

l

20

04

-O

ct

20

05

-Ja

n

20

05

-A

pr

20

05

-Ju

l

20

05

-O

ct

20

06

-Ja

n

20

06

-A

pr

20

06

-Ju

l

20

06

-O

ct

20

07

-Ja

n

20

07

-A

pr

20

07

-Ju

l

20

07

-O

ct

20

08

-Ja

n

20

08

-A

pr

20

08

-Ju

l

20

08

-O

ct

20

09

-Ja

n

20

09

-A

pr

20

09

-Ju

l

20

09

-O

ct

20

10

-Ja

n

20

10

-A

pr

20

10

-Ju

l

20

10

-O

ct

20

11

-Ja

n

20

11

-A

pr

20

11

-Ju

l

MBA Index Applications for Refinancing FNMA MBS Annualized Liquidation Rates

Prepay Speeds and Refinance Apps

Sources: Mortgage Bankers Association and Fannie Mae Monthly Volume Summaries 30

Additional Data Available on a Monthly Basis

Composition

report for US

Monthly state

profile of

mortgage

activity


State-level Refinance Apps Trend

-100%

-50%

0%

50%

100%

150%

200%

250%

Jan

uar

y 2

01

2

Feb

ruar

y 2

01

2

Mar

ch 2

01

2

Ap

ril 2

01

2

May

20

12

Jun

e 2

01

2

July

20

12

Au

gust

20

12

Sep

tem

be

r 2

01

2

Oct

ob

er

20

12

No

vem

be

r 2

01

2

De

cem

be

r 2

01

2

Jan

uar

y 2

01

3

Feb

ruar

y 2

01

3

Mar

ch 2

01

3

Ap

ril 2

01

3

May

20

13

Jun

e 2

01

3

July

20

13

Au

gust

20

13

Sep

tem

be

r 2

01

3

Year over Year Change in Refinance ApplicationsTop 5 Refinance Volume States

CA FL TX NY GA


State-level Purchase Apps Trend

0%

10%

20%

30%

40%

50%

60%

CA FL TX NY WA

Purchase Share - 2013 versus 2012Top 5 Purchase Volume States

September 2012 September 2013


Discussion of New Mortgage Rate Series

Each week mortgage lenders report their weekly interest rates and associated points in

the Survey along with their mortgage application volumes. For conventional loans, the

contract interest rates are for an 80% loan-to-value (LTV) loan. FHA loans have higher

average LTVs. The points measure includes both origination fees and discount points.

The following interest rates are covered:

FRM 30-Year (Conforming)

FRM 15-Year

FRM 30-year Jumbo

5/1 ARM

FHA 203(b)

Survey participants must contribute a minimum number of each loan type to enter the

calculation.

34

Comparison of MBA and Freddie Mac Survey 30-Year Fixed Rates

Source: Mortgage Bankers Association, Freddie Mac 35

Jumbo-Conforming Spread

36

Jumbos Have a Lower Refi Share

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

June

200

9

Aug

ust

2009

Oct

ober

200

9

Dec

embe

r 200

9

Febr

uary

201

0

Apr

il 20

10

June

201

0

Aug

ust

2010

Oct

ober

201

0

Dec

embe

r 201

0

Febr

uary

201

1

Apr

il 20

11

June

201

1

Aug

ust

2011

Oct

ober

201

1

Dec

embe

r 201

1

Febr

uary

201

2

Apr

il 20

12

June

201

2

Aug

ust

2012

Oct

ober

201

2

Dec

embe

r 201

2

Febr

uary

201

3

Apr

il 20

13

June

201

3

Aug

ust

2013

Refi Share of Conforming Loans and Refi Share of Jumbo Loans

RefiShareofConfLoans RefiShareofJumboLoans

37

ARM Share

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

June

200

9

July

200

9

Aug

ust

2009

Sept

embe

r 200

9

Oct

ober

200

9

Nov

embe

r 200

9

Dec

embe

r 200

9

Janu

ary

2010

Febr

uary

201

0

Mar

ch 2

010

Apr

il 20

10

May

201

0

June

201

0

July

201

0

Aug

ust

2010

Sept

embe

r 201

0

Oct

ober

201

0

Nov

embe

r 201

0

Dec

embe

r 201

0

Janu

ary

2011

Febr

uary

201

1

Mar

ch 2

011

Apr

il 20

11

May

201

1

June

201

1

July

201

1

Aug

ust

2011

Sept

embe

r 201

1

Oct

ober

201

1

Nov

embe

r 201

1

Dec

embe

r 201

1

Janu

ary

2012

Febr

uary

201

2

Mar

ch 2

012

Apr

il 20

12

May

201

2

June

201

2

July

201

2

Aug

ust

2012

Sept

embe

r 201

2

Oct

ober

201

2

Nov

embe

r 201

2

Dec

embe

r 201

2

Janu

ary

2013

Febr

uary

201

3

Mar

ch 2

013

Apr

il 20

13

May

201

3

June

201

3

July

201

3

Aug

ust

2013

ARM Share of Jumbo, Conforming and Total Loans

ARMShareofJumboLoans ARMShareofConfLoans ARMShareofTotalLoans

38

•The Mortgage Credit Availability Index (MCAI) is calculated using several quantitative metrics related to borrower eligibility

•Credit score, loan type, loan-to-value ratio, etc.

•Metrics are combined to calculate the MCAI, a summary measure which indicates the availability of mortgage credit at a point in time.

•MCAI is a measure of mortgage credit supplied to the market.

•Unlike survey measures which only capture whether lending provisions are tightening or loosening, the MCAI provides a standardized quantitative metric

that is solely focused on mortgage credit.

AllRegs ® Market Clarity Data

MBA Proprietary

Model

Mortgage Credit

Availability Index

Credit Availability Index

39

AllRegs Data, Processing by MBA

• Transformation of AllRegs Market Clarity Data by MBA analyst.

• TERM: Original = “5,10,15,30”

Transformation: Min Term=5; Max Term=30

• PURPOSE: Original = “Cash Out Refinance, Purchase, Rate and Term Refinance”

Transformation: “Allows Cash Out”

• Granular data is categorized for standardization and analysis.

• MAX LTV Original = 95.6 OR 95 OR 92 OR 98.5, etc…..

Transformation =

° LTV <=90

° LTV >90 and <=95

° LTV >95

40

7 Dimensions of Risk Weighting

Loan Term

IO/Amortization Amortization Loan Purpose

FICO / LTV Combo LTV / Occupancy Joint

Doc.Type

Product_Type Weight

FIXED

ARM

BALLOON

purpose_ROLLUP Weight

Allows Rate/Term Refi, Not Cash Out

Allows Cash Out Refi

Purchase Transactions Only

Max_LTV_Bracket occupancy_ROLLUP Weight

LTV <=90 Allows Investor Homes

LTV >90 and <=95 Allows Investor Homes

LTV >95 Allows Investor Homes

LTV <=90 Allows Second Homes, Not Investor

LTV >90 and <=95 Allows Second Homes, Not Investor

LTV >95 Allows Second Homes, Not Investor

LTV <=90 Owner Occupied Only

LTV >90 and <=95 Owner Occupied Only

LTV >95 Owner Occupied Only

Int_Only_Flag Product_Type Weight

NON-IO FIXED

NON-IO ARM

NON-IO BALLOON

INTEREST ONLY FIXED

INTEREST ONLY ARM

INTEREST ONLY BALLOON

Max_LTV_Bracket Min_FICO_Bracket Weight

LTV >95 FICO <=620

LTV <=90 FICO <=620

LTV >90 and <=95 FICO <=620

LTV >95 FICO >620 and <=680

LTV >90 and <=95 FICO >620 and <=680

LTV <=90 FICO >620 and <=680

LTV <=90 FICO >680

LTV >95 FICO >680

LTV >90 and <=95 FICO >680

Doc_Type_ROLLUP Weight

FULL/ALT DOC

STATED DOCUMENTATION (Anywhere the word *Stated* appears)

NO DOC (Anywhere the word *NO* is mentioned, excludes any entries with the word *STATED*)

term_ROLLUP Weight

Max Term <= 30

Max Term >30

41

Historical Simulation

0

100

200

300

400

500

600

700

800

900

3/1

/20

07

5/1

/20

07

7/1

/20

07

9/1

/20

07

11

/1/2

00

7

1/1

/20

08

3/1

/20

08

5/1

/20

08

7/1

/20

08

9/1

/20

08

11

/1/2

00

8

1/1

/20

09

3/1

/20

09

5/1

/20

09

7/1

/20

09

9/1

/20

09

11

/1/2

00

9

1/1

/20

10

3/1

/20

10

5/1

/20

10

7/1

/20

10

9/1

/20

10

11

/1/2

01

0

1/1

/20

11

3/1

/20

11

5/1

/20

11

7/1

/20

11

9/1

/20

11

11

/1/2

01

1

1/1

/20

12

3/1

/20

12

5/1

/20

12

7/1

/20

12

9/1

/20

12

11

/1/2

01

2

1/1

/20

13

3/1

/20

13

5/1

/20

13

Source: Mortgage Bankers Association, AllRegs Market Clarity

Histoical Simulation: Mortgage Credit Availability Index, Index Level by Month (NSA, 3/2012=100)

Simulated 2006-2007 Index Value Relative 3/2012=100 Base Period

Current Index Levels(3/2012 = 100)

•AllRegs and MBA examined guidelines from the ‘06-’07 period and estimate that the Mortgage Credit

Availability Index was probably somewhere between 750 and 850 during this period.

•This was due to the high availability of low-doc; no-doc; stated income; interest-only loans.

•Also, the lending environment during that time made drawing cash against the equity in a home a

common and accessible industry trend, making credit more available during that time while also

carrying a high amount of risk.

Reading the Mortgage Credit

Availability Index

Lower Index = Less Credit Available

Higher Index = More Credit

Available

42

Current Trends in the MCAI

•The MCAI is benchmarked to an index value of 100 in March 2012. Relative to the base

period (March 2012), index values above 100 represent greater availability of mortgage

credit while index values below 100 are an indication that mortgage lending standards

have tightened.

Source: MBA MCAI 43

Builder Application Survey

•The MBA’s Builder Application Survey (BAS) measures loan application

activity received by lenders affiliated with or who work in cooperation with

home builders for loans on new single-family properties. This survey

focuses solely on the new home sales market.

•The monthly BAS Press Release will track changes in national

application volume, average loan size and loan products used for new

home sales purchases. The MBA will also release a New Home Sales

estimate.

•Release Date – Second Week of the Month

•As the survey continues to expand, the MBA expects to phase in more

detailed information including state- and metropolitan-level statistics.

44

Comparison of Index Levels

60

80

100

120

140

160

180

200

220

240

260

60

70

80

90

100

110

120

130

140

Jan

-11

Feb

-11

Mar

-11

Ap

r-1

1

May

-11

Jun

-11

Jul-

11

Au

g-1

1

Sep

-11

Oct

-11

No

v-1

1

De

c-1

1

Jan

-12

Feb

-12

Mar

-12

Ap

r-1

2

May

-12

Jun

-12

Jul-

12

Au

g-1

2

Sep

-12

Oct

-12

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Mar

-13

Ap

r-1

3

May

-13

Jun

-13

Jul-

13

Au

g-1

3

WA

S Ind

ex Le

velB

AS

Ind

ex

Leve

l

Date

New Home Market versus Total Market

Builder Application Survey (NSA) Weekly Application Survey Purchase Index (NSA)

45

New Home Sales Estimate

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Jan

_1

1

Feb

_1

1

Mar

_1

1

Ap

r_1

1

May

_1

1

Jun

e_

11

Jul_

11

Au

g_1

1

Sep

_1

1

Oct

_1

1

No

v_1

1

De

c_1

1

Jan

_1

2

Feb

_1

2

Mar

_1

2

Ap

r_1

2

May

_1

2

Jun

e_

12

Jul_

12

Au

g_1

2

Sep

_1

2

Oct

_1

2

No

v_1

2

De

c_1

2

Jan

_1

3

Feb

_1

3

Mar

_1

3

Ap

r_1

3

May

_1

3

Jun

_1

3

Jul_

13

Au

g_1

3

Census New Home Sales vs MBA New Homes Sales EstimateMonthly, NSA

Census NHS (NSA) MBA NHS Prediction

46

Builder App Trends by State

47

48


48


Single-family Originations: Science and Art

Benchmark to latest HMDA Compare volume reported sold to Freddie Mac with our purchase volume

2012 originations sold to Freddie Mac in 2012 2011 originations sold to Freddie Mac in 2012 by a wholesaler HMDA volumes totaled about 95% of Freddie Mac’s purchase volume

Conventional originations reported in 2012 HMDA = $1.66 trillion, thus $1.66/0.95 = $1.75 trillion conventional originations (1st and junior liens)

Add FHA+VA+USDA = $0.38 trillion, puts 2012 single-family at $2.13 trillion

MBA data helps gauge recent activity Dollar application volumes not released by MBA Compare conventional applications in 2012 HMDA with average MBA index for

conventional applications Use ratio to convert current-year index into application volume

48

$0

$250

$500

$750

$1,000

$1,250

$1,500

$1,750

$2,000

$2,250

$2,500

$2,750

$3,000

$3,250

$3,500

$3,750

$4,000

'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14

FHA & VA

Conventional Refi

Coventional Purchase

Forecast

Mortgage Origination Volume Is Large and

Variable

Sources: Freddie Mac, HUD, VA

Total Single-Family Mortgage Originations (Billions of Dollars)

25%

Drop

49

Weekly Conventional Application Volume1

Conv Refi, $17.8 B

Conv Purch, $12.1 B

0

10

20

30

40

50

60

10/5/12 11/5/12 12/5/12 1/5/13 2/5/13 3/5/13 4/5/13 5/5/13 6/5/13 7/5/13 8/5/13 9/5/13

$ Billions

Source: MBA Weekly Applications Survey, Conventional Market (NSA), HMDA, Freddie Mac 1The MBA Survey does not release dollar application volume, but using 2012 HMDA

as a base year, we estimate market level application dollar volume.

Purchase up 12%

Refi down 68%

(same week, Y-O-Y)

50

Where to Get More Information Look for regular updates to our economic forecast,

commentary and data at

www.FreddieMac.com/news/finance

Contact us at [email protected]

Opinions, estimates, forecasts and other views contained in this document are those of Freddie Mac's Office of

the Chief Economist, do not necessarily represent the views of Freddie Mac or its management, should not be

construed as indicating Freddie Mac's business prospects or expected results, and are subject to change without

notice. Although the Office of the Chief Economist attempts to provide reliable, useful information, it does not

guarantee that the information is accurate, current or suitable for any particular purpose.

Information from this document may be used with proper attribution. Alteration of this document is prohibited.

© 2013 by Freddie Mac.

51

Outlook for 2013 and 2014

2012 2013 2014

GDP Growth 1.8% 1.7% 2.5%

Inflation 1.9% 2.1% 1.9%

Unemployment 8.1% 7.5% 7.0%

Fed Funds 0.1% 0.2% 0.2%

10-year Treasury 1.8% 2.3% 3.0%

30-year Mortgage 3.7% 4.1% 4.9%

Refi originations ($ B) 1,247 973 388

Purchase originations ($B) 503 619 703

New Home sales (thousand) 364 465 493

Existing home Sales (thousand) 4,634 5,070 5,362Source: MBA August 2013 Forecast

52

Estimated Originations 1990 to 2014: SF Market

Source: MBA – August 2013 Mortgage Finance Forecast

53

Contact Information & MBA Resources

Michael Fratantoni Vice President, Single-family Research and Policy Development

[email protected]

(202) 557-2935

MBA Homepage:

www.mba.org

MBA Research:

www.mba.org/research

MBA Weekly Apps (Main page, FAQ, Methodology Document):

www.mortgagebankers.org/WeeklyApps

Builder Application Survey:

http://www.mortgagebankers.org/researchandforecasts/builderapps.htm

MCAI Product Page:

www.mortgagebankers.org/MortgageCredit

54

http://www.mba.org/

http://www.mba.org/research

http://www.mortgagebankers.org/WeeklyApps

http://www.mortgagebankers.org/researchandforecasts/builderapps.htm

http://www.mortgagebankers.org/MortgageCredit

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