Mortgage Bankers Association lowers forecast of mortgage originations for 2009
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PrintThe Mortgage Bankers Association (MBA) lowered its forecast of mortgage originations for 2009 to $2.03 trillion, a reduction of more than $700 billion from its earlier forecast in March. The bulk of the drop is due to reductions in refinancings, while it attributes $84 billion of the drop to lower purchase originations.
In its June forecast, the MBA is now forecasting $737 billion in purchase originations and $1,297 billion in refinance originations.
In a statement issued with the announcement, the MBA attributed the $84 billion reduction in its forecast for purchase originations to the larger than expected reduction in home prices leading to smaller loans, and to a large share of distressed sales, resulting in all cash sales, have reduced the volume of mortgages.
MBA’s Chief Economist Jay Brinkmann stated in a statement that "even with higher projected home sales for all of 2009, the projected lower average home price and higher cash share have combined to lower projected volume of purchase originations."
The MBA said that the increase in interest rates, began to choke off the refinance wave in May, earlier than anticipated in its March forecast.
MBA now projects that total existing home sales for 2009 will be 4.8 million units, a drop of 1.2 percent from 2008. MBA projects new home sales will be 352,000 units, a decline of about 27 percent from 2008. Median home prices for new and existing homes will likely continue to fall, dropping by about ten percent from 2008 levels, but leveling off in 2010 as the economy improves.
