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NEW YORK, June 22 A U.S. mortgage industry
group on Monday slashed its forecast for 2009 loan originations
by more than 25 percent as higher mortgage rates depress
The Mortgage Bankers Association estimates that lenders
will make $2.03 trillion in new home loans this year, down by
more than $700 billion from its forecast in March.
The Washington-based group attributed $84 billion to
reduced lending on home purchases.
The rest of the decline would be from fewer refinancings
and "very low" volumes on an affordability loan program
overseen by mortgage agencies Fannie Mae FNM.N FNM.P and
Freddie Mac FRE.N FRE.P, MBA said in a statement.
Mortgage rates have risen from record lows since the MBA's
prior forecast as have Treasury yields, which spiked amid a
flood of debt issuance needed to fund federal rescue programs.
In March, the MBA boosted its forecast of mortgage
originations by more than $800 billion but reversed most of
that expected increase with Monday's revision.
Average 30-year loan rates have slipped from recent peaks
but at 5.38 percent last week remain well above the record low
4.78 percent set in April, Freddie Mac reported on Thursday.
The higher rates have quelled refinance demand.
The MBA's index of refinancing applications in the week
ended June 5 sank to 2,605.7 after hovering between about 5,100
and 6,800 from the March 20 week through the end of April.
Estimates of loans moving through the Home Affordable
Refinance Program, using Fannie and Freddie, have also fallen
"While generally accepted estimates were that around 1.5 to
2 million borrowers might avail themselves of this program,
with many more potentially eligible, to date only about 13,000
loans have been completed according to press reports," Jay
Brinkmann, MBA's chief economist, said in a statement.
Though the loans created under this program should
increase, volume is unlikely to come near forecasts, he said.
Loans for home purchases are also expected to be less than
expected in March. Falling prices mean lower loan sizes, and
homes bought in foreclosure and by investors are often done for
cash, the trade group said.
The MBA expects total existing home sales in 2009 to drop
1.2 percent from last year to 4.8 million units. New home sales
will slump about 27 percent to 352,000 units, the group said.
"Median home prices for new and existing homes will likely
continue to fall, dropping by about 10 percent from 2008
levels, but leveling off in 2010 as the economy improves,"
(Reporting by Lynn Adler and Richard Leong; )