MBA releases new mortgage finance forecastMortgagePress.comMortgage originations,interest rate
The Mortgage Bankers Association has released its monthly update
of its Mortgage Finance Forecast. MBA is projecting $2.4 trillion
in mortgage originations in 2004, down from its previous estimate
of $2.6 trillion. MBA said that a rising interest rate environment
will cut into refinancings in 2004, but home purchases will remain
MBA now projects that the 10-year Treasury rate will increase
from four percent in the first quarter to 4.9 percent in the fourth
quarter, averaging 4.5 percent for the year. Mortgage rates will
increase correspondingly; the average 30-year fixed mortgage rate
will increase to 6.4 percent in the fourth quarter, from 5.6
percent in the first quarter. While higher interest rates are
expected to cause a slight moderation in overall home sales and
residential building in the months ahead, MBA is forecasting a
record number of new home sales and only a slight decline in
existing home sales.
MBA expects that the fall in refinance originations will be
faster than expected because of a more rapid increase in interest
rates than previously forecasted. Refinancings will total $1
trillion, down from the previously forecasted $1.2 trillion.
Mortgages for purchasing homes will make up 57 percent of total
originations, or $1.4 trillion.
The volume of adjustable-rate mortgages will likely rise as more
households choose to use ARMs to manage affordability.
Approximately 33 percent of the total number of conventional
purchase loans will be ARMs.