iEmergent: Refi Volume Will Plunge 52% This Year

Refinances in 2010 will be down 52% and purchase mortgage volume will be down 5% from 2009, according to the latest projections from iEmergent, a Des Moines, Iowa-based market research firm. It predicts total volume of between $1.09 trillion and $1.2 trillion for this year, as more than one-third of U.S. households are no longer in the homebuyer pool, which is now at levels lower that those experienced in the early 1990s. If the high end of its estimate is reached, iEmergent predicts a 49% refi/51% purchase market share split for this year, with purchase volume of $557 billion and refi volume of between $531 billion and $643 billion. Dennis Hedlund, president of iEmergent said current elevated loan volumes are unsustainable as consumers are savings more and are worried about their jobs. Lenders who relied heavily on refis last year will face considerable risk for their business year and next. "Competing for home buyers and loan originations in flat or declining markets is essentially a local, zero-sum game, where loan acquisition efficiency is crucial," said Mr. Hedlund. "The ability of lenders to turn quantitative market analytics and forecasts into new and more effective lending strategies that are matched to their local markets is fundamental to survival over the next two years."