MBA Projects 2012 To See Lowest Mortgage Lending Level In Five Years

Projections show a low year for reverse mortgage endorsements. The forward lending world, too, sees 2012 as having the lowest volume in five years, by dollar amounts.

Originations will fall to less than $1.1 trillion in 2012, according to a report by National Mortgage News, which cites statements made by the Mortgage Bankers Association’s Michael Fratantoni, VP of research. Fratantoni shared projections with attendees of the MBA’s secondary market conference held in New York City this week, according to the report.

National Mortgage News noted its own projection for 2012, placing the total 18% higher at $1.3 trillion. The report writes:

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“Even as refinancings continue to dwindle—from $858 billion in 2011 to $682 billion this year and $357 billion in 2013—the MBA expects the purchase money market to improve.

It is now forecasting $682 billion in purchase loans this year, up from $404 billion in 2011, and $706 billion next.

But Fratantoni admitted that the association’s projections “depend entirely where (mortgage) rates go from here.”

Right now, rates are tracking 0.5% “below where we thought they would be,” which is one reason for the group’s optimism. “Interest rates are taking the European elections hard,” said chief economist Jay Brinkmann. “As long as we are a safe haven, that will keep rates down.”…

Read the original article.

Written by Elizabeth Ecker

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  • It seems MBA leadership have reasonable expectations.  Our leadership as displayed at three NRMLA conventions over the last six years is much different.  I would like to read just one article attempting to justify the 100,000 HECM endorsement prediction made either in New Orleans or NYC.  Forget the ridiculous proprietary reverse mortgage volume predictions for the end of last decade — at least for now.  (I, for one, never felt so embarrassed in front of FHA Commissioner Brian Montgomery.)

    It would be a nice change just to see endorsements above 60,000 next fiscal or calendar year.  BUT 100,000 just is way over the top.  It makes industry leadership look like it lacks the ability to self evaluate our own situation; sad to say, perhaps that last assessment is in fact the most realistic.  Perhaps leadership just cannot differentiate between how it is going for their own reverse mortgage operations versus the industry as a whole.  Something needs to change and change sooner rather than later.

    It seems reaching even 60,000 HECM endorsements for either fiscal or calendar year 2012 is almost out of reach even this early in 2012.  After the first seven months of this fiscal year, we only have about 33,500 endorsements. 

    While we had over 27,900 endorsements in the last five months of fiscal 2011, that hardly seems obtainable with 1) much lower case number assignments in the prior three months than for the same period last year and 2) much lower pull through rates expected for the remainder of this fiscal year by HUD.

    Some are (unrealistically) predicting that the calendar year 2012 will have higher totals than what is expected for fiscal 2012.  While that is inspiring, there are no trends or clear indicators to back up those expectations.  That prediction is, however, more responsible than predicting 100,000 HECM for any consecutive twelve month period ending in 2013 based on current information and trends.

    I would like to read just one article attempting to justify the 100,000 HECM endorsement prediction made either in New Orleans or NYC.  Perhaps like on “Last Man Standing,” a sports illustration is required.  It is great to be a cheerleader; leadership, however, must take far more responsibility for what is actually happening in league play.  You know kind of like a managing owner or a general manager must display in the MLB, NBA, or NFL.  In other words, let cheerleaders do the cheerleading and let owners and top management responsibly lead the industry. 

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