Mortgage originations may surpass initial estimates for 2011, but the the outlook for 2012 is weaker, and is expected to be the lowest volume since 1997, according to the Mortgage Bankers Association’s Economic and Mortgage Finance Forecasts, released Friday.
The MBA’s forecast projects $1.1 trillion in residential mortgage origination in 2011, which is roughly $100 million more than initially forecast. However, MBA also revised its outlook for 2012 with a $30 billion reduction to $931 billion—the lowest in nearly 15 years.
“We have lived through a series of unprecedented events over the past month: the debt ceiling crisis, S&P’s downgrade of US Treasury debt, the ongoing sovereign debt crisis in Europe, a commitment by the Fed to keep rates near zero for the next two years and stock market volatility that has reached levels not seen since the fall of 2008,” said Jay Brinkmann, senior vice president of research and education and chief economist for MBA. “While there is substantial uncertainty about how these events will impact consumer and business behavior, we do not believe that the economy is facing the same types of risks as in 2008.”
The sliver lining, Brinkmann said, is that mortgage rates are approaching historic lows, with low rates continuing to boos refinances above earlier projections.
“Relative to our prior forecast, we have boosted our refinance forecast estimate for 2011 to $697 billion, up almost $100 billion, and increased our refinance estimate for 2012 by more than $150 billion, to $400 billion,” he said.
Written by Elizabeth Ecker