Analysts at KBW Inc.'s Keefe, Bruyette & Woods Inc. boosted their estimate for full-year industrywide mortgage originations by roughly one-quarter, to $2.4 trillion, citing falling mortgage rates and the government's Homeowner Affordability and Stability Plan.

That would be 60% higher than last year's total, though "materially lower" than during the boom of 2003, the analysts wrote in a note sent to clients Tuesday.

They estimated that roughly 15% of Fannie Mae and Freddie Mac borrowers will "be unable to refinance" as home prices continue to fall and loan-to-value ratios rise above 105%.

Some conforming borrowers have interest-only mortgages from which a refinancing would move them into a fully amortizing loan with much higher payments, the analysts wrote. Others are in hybrid adjustable-rate mortgages, the report said, and current low rates "reduce the incentive for these borrowers to refinance."

Borrowers with alternative-A loans that were underwritten with reduced or no documentation would now have to provide full documentation and may not qualify for refis, the report said. In addition, borrowers with low credit scores generally would have to pay additional fees to refinance, and delinquent borrowers are ineligible.

As a result, refinancing volume is expected to be 40% lower than in 2003.

Fannie, Freddie and the Federal Housing Administration will account for nearly 90% of the market because the capital markets' funding of private mortgages "has completely dried up," the report said.

FHA volume is expected to rise 38% this year, the report said. But the analysts cautioned that the FHA's share of total originations — 19% for all of last year and 34% in the fourth quarter — should fall to 16%, primarily as refi volumes rise sharply for the GSEs.

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