Because of increased refinance applications and originations, the Mortgage Bankers Association raised its mortgage origination forecast for 2012 by $188 billion to $1.28 trillion.

In 2011, originations totaled $1.26 trillion.

The MBA expects refinance originations to reach $870 billion in 2012, a figure similar to 2011. The association is slightly lowering its purchase originations forecast for 2012 to $409 billion from $415 billion, reflecting lower than previously expected home prices and home sales.

The MBA’s updated forecast of refinance activity is largely independent of the HARP 2.0 initiative.

“We factored HARP lending of roughly $100 billion in both 2012 and 2013 into our April forecast, and the HARP share of refinance activity has remained relatively constant over recent months,” said Mike Fratantoni, MBA’s vice president of research.

“However, mortgage rates below 4% and regular media coverage showcasing ‘record low mortgage rates’ provide sufficient incentive and impetus for borrowers to examine their current rate,” Fratantoni said.

The MBA projects lower mortgage rates for the rest of 2012, also causing it to lift its refinance forecast.

“Scenarios we have consistently highlighted that could drive rates down and refis up have materialized, primarily due to market turmoil in Europe,” Fratantoni said. “Deterioration of the debt situation in Spain and Greece and a new regime in France that is a weaker proponent of European austerity, along with slower economic growth globally, have driven the U.S. 10-year Treasury yield down.”