MBA Revised Production Forecast Projects $100 Billion More in Purchase Business

The Mortgage Bankers Association (MBA) has released its latest Economic Forecast and Mortgage Finance Forecast, projecting $1.1 trillion in residential mortgage origination volume in 2011, roughly $100 billion more than earlier forecasts, as low mortgage rates have brought in greater than expected refinance volume, while purchase volume has been less than anticipated. Despite lower forecasted mortgage rates, weaker projected economic growth in 2012 led to a reduction in MBA's origination forecast for that year to $931 billion, which would be the lowest volume originated since 1997. "We have lived through a series of unprecedented events over the past month:  The debt ceiling crisis, S&P's downgrade of U.S. 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 VP of research and education and chief economist for the Mortgage Bankers Association (MBA). "For the market as a whole, we are now projecting total mortgage originations to be $1.1 trillion in 2011, up about $100 billion from our earlier projection, and $931 billion in 2012, down about $30 billion from our prior estimate." Brinkmann added, "The silver lining in all the turmoil for our industry is that mortgage rates are once again at or approaching historic lows. Lower rates continue to boost refinance volumes above our earlier projections, even though refinance application volume remains quite constrained by tight credit standards, the weak job market, and the large number of underwater borrowers."