That the recession has been over officially for more than a year is of little solace to downtrodden mortgage brokers. But a Fannie Mae economist said that if loan jockeys are patient, things will get better.
Speaking to a gathering of brokers meeting in Las Vegas, Orawin Velz, director of economics and the person responsible for forecasting at Fannie Mae, said consumers should be "ready to spend again" by the second half of 2011.
"They can't hunker down for too much longer," Velz said of consumers who have yet to open their pocketbooks after suffering through the worst recession in decades. "So have patience. By the second half, you will feel a lot better."
Consumer spending is the biggest driver of economic growth, the Fannie Mae economist explained at the NAMB West conference sponsored by the National Association of Mortgage Brokers. "What consumers do largely determines what kind of recovery you have," she said. "But they're not in the mood to spend very much, so they are saving more and consuming less."
Modest job gains haven't been enough to get consumers off dead center. And neither has a run of record low interest rates. But jobs are so important that interest rates could be at zero and it wouldn't be enough to move the market, Velz said.
However, the trend for jobs is definitely up, she added. And with businesses "loaded" with cash, they're "going to have to start hiring soon."
The economist believes even a modest pick up in job growth will result in a similar pick up in housing sales. "What happens in the labor market pretty much outlines what happens in the housing market," she said.
Fannie Mae is pointing for a "gradual housing recovery" next. Nevertheless, Velz said originations will decline from $1.5 trillion this year to $1.2 trillion in 2011. That's somewhat more optimistic than the Mortgage Bankers Association, which is now forecasting a dip in loan production to under $1 trillion. In contrast, in 2003, lenders generated almost $4 trillion in new mortgages.
