MBA: 2004 Could be $2 Trillion Year

The Mortgage Bankers Associations has revised its origination forecast for 2004 upwards to nearly $2 trillion and it expects the industry to shed 65,000 jobs due to the decline in refinancings.As a result of modeling changes, MBA has increased its 2004 origination forecast from $1.55 trillion to $1.99 trillion. Nevertheless, the fall in production this year will be steep, since MBA is now estimating 2003 loan production to hit $3.79 trillion -- a new record. "There is no question that the decline in volume will reveal excess capacity," MBA chief economist Doug Duncan said. Employment in the mortgage industry peaked at 435,000 in August. By year-end 2004, the MBA economist expects 65,000 positions will be terminated. He stressed, however, that most of the layoffs will be temporary workers. "We have already seen early indications of business exits, a couple of publicly announced business failures and a number of acquisitions, Mr. Duncan told reporters at a press briefing. "This happens after every refinancing wave peaks," he added. On Feb. 6, the Bureau of Labor Statistics will release revised payroll numbers for 2003 that is expected to push the 10-year Treasury note up. If the revision shows a 100,000 increase in payrolls for the last several months, "it will add 20 basis points," to the 10-year Treasury yield, Mr. Duncan told MortgageWire.