Mortgage origination volumes held up in the first quarter despite predictions of a 20% to 25% drop-off last week, according to a preliminary forecast for the period.

Paul Miller, managing director with FBR Capital Markets, said total industry sales to Fannie Mae and Freddie Mac in the first quarter of 2013 continued to steadily rise, increasing to $355 billion in Q1 2013 from $352 billion in the fourth quarter of 2012. Some of Miller’s forecast is based on preliminary first-quarter origination data from Inside Mortgage Finance.

He continued saying, “Assuming a 70%–75% market share for the government sponsored enterprises, this correlates to a total origination market of approximately $450 billion to $500 billion, which is relatively in line with the current Mortgage Bankers Association forecast.”

JPMorgan Chase (JPM) started to pull forward in the originations market, likely due to the acquisition of MetLife‘s portfolio. JPMorgan volumes increased 25.6% quarter over quarter, according to data from FBR Capital.

Comparatively, Wells Fargo (WFC) continued to decrease its share in the correspondent market, balancing out positive data from JPMorgan.

Wells Fargo reported a 17.8% overall market share in the first quarter of 2013, a drop from 30.2% a year earlier, the FBR Capital report states.

Although refinances have dwindled, Miller predicts refi volumes from the Home Affordable Refinance Program will rebound, especially with the upcoming GSE marketing campaign.

FBR Capital says more than a $2 trillion in mortgages still have an economic incentive to refinance with current refinance capacity standing at $1.2 trillion to $1.3 trillion.

“Overall, we remain buyers in the space, particularly on any material weakness, as we expect commentary on volumes and gain-on-sale margins will remain positive given a beneficial outlook for the HARP program and refinancing volumes in general,” Miller added.

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