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$1.5 Trillion Mortgage Originations Forecast for 2010

Washington, D.C - The Mortgage Banker's Association (MBA) in an October 13, 2009 statement forecasts an increase in home sales for year 2010. Home sales for 2009 will be better than 2008's total and interest rates will remain steady now and into the first part of 2010.

That's good news for first-time home buyers as well as repeat home buyers in metro St. Louis. They can take advantage of newly passed legislation that extends and expands stimulus plan tax credits for their home purchases.

The MBA is the national association representing the real estate finance industry. In their 2010 outlook, Jay Brinkmann, MBA's chief economist and senior vice president for research and economics states, "The recession is behind us but the effects of the recession will linger for some time" and he continued that the state of the economy will begin to moderate as the nation "resumes sustained growth in the second half of the year."

Mortgage originations should reach $1.5 trillion in 2010. Modest increases in home sales should drive purchase originations but refinance originations are expected to decline.

The MBA predicts uncertainty regarding rates immediately following the termination of the Federal Reserve's purchase of mortgage-backed securities in the first quarter 2010. No doubt the Fed will do its best to minimize adverse effects, but the elimination of these purchases will put upward pressure on all long-term rates as well as the spread between mortgage rates and Treasuries.

Here are the key points of the latest MBA forecast:

  • Fixed mortgage rates are expected to average 5.0 percent in the fourth quarter of 2009 and increase to 5.6 percent by the end of 2010.
  • Total existing home sales for 2009 will end up about 2.0 percent higher than those for 2008. Existing home sales are projected to increase in 2010 by about 11.2 percent.
  • New home sales for 2009 will be down by about 18.0 percent relative to 2008. Sales seemed to have bottomed in the first quarter of 2009 and have been rebounding modestly. For all of 2010, new home sales should post an increase of about 21.0 percent from 2009's.
  • National average home price declines should abate by early 2010. The demand will be highest for entry-level homes.
  • Purchase originations for 2009 will be $718 billion, about 2.0 percent below the 2008 level of $731 billion. Purchase originations should rise about 12.0 percent in 2010, as existing home sales recover and home prices stabilize.

Link: 2010 Forecast

Posted by Customer Service on November 20th, 2009 11:09 AMPost a Comment (0)
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