The Mortgage Bankers Association is projecting a 28% jump in purchase money originations in 2011. And even though refi originations are expected to fall off the cliff, the MBA is still looking for a $1 trillion year.
Issued at the group's annual secondary market conference in New York, the latest forecast calls for an increase in purchase money mortgages from $474 billion last year to $606 billion in 2011.
Refi lending, on the other hand, is projected to decline 59%, from $1.33 trillion in 2010 to just $424 billion this year.
MBA expects an even more precipitous drop in refi business in 2012, when the volume of new loans taken out to replace existing mortgages falls to $233 billion. At the same time, though, purchase money lending is expected to increase again in 2012, to $729 billion.
Overall, originations will decline from $1.5 trillion in 2010 to $1.03 trillion this year and to $962 billion in 2012.
The MBA's economists' outlook for mortgage rates is not terribly terrific, either. They expect the benchmark 30-year rate to reach 6.2% by the end of 2012. At that rate, said Michael Fratantoni, the group's director of research, buyers "may not be in the same rush to buy as past generations."
For that reason, the MBA, like other housing trade groups, is not expecting any increase in housing starts in 2011 – and a slight drop in single-family starts.
