Posted on Monday, January 31, 2011
The Mortgage Bankers Association (MBA) released its market outlook to the media on Wednesday. The trade group’s economists are expecting mortgage lending to shrink by 36 percent this year.
They project originations – including loans for home purchases and refinancing – to total $966 billion in 2011, compared to $1.5 trillion in 2010.
If MBA’s forecast holds true, it will be the mortgage industry’s poorest showing since 1997, and the organization expects the slump to stick for a while. Its projection for 2012 is that origination volume will edge up only slightly to $976 billion.
Jay Brinkmann, MBA’s chief economist, says the drop in the forecast is clearly in the refinance share, which will wane significantly as mortgage rates rise.
Some 69 percent of loans funded in 2010 were refinances, totaling just over $1 trillion. Refis are expected to drop to just 36 percent of overall mortgage activity this year and account for $352 billion of the total pie.
Loans for home purchases, on the other hand, should get a little bit of a boost, according to MBA’s projections, rising from $473 billion in 2010 to $614 billion in 2011.
Brinkmann says he expects homeownership to expand as long as the job market improves and consumers begin to feel more secure and confident about their own financial futures.
By: Carrie Bay, DS NEWS