MBA Cuts Origination Forecast

After nearly a year of rising production forecasts, the Mortgage Bankers Association of America has lowered its mortgage origination prediction for 2003 to $3.2 trillion.At its annual convention last October, the MBA was forecasting $1.8 trillion in loan originations. Since then the forecast has been revised upward six times, reaching a peak of $3.4 trillion in July. In addition to its downward revision for this year, the latest forecast calls for $1.5 trillion in loan production next year, down from the $1.9 trillion the MBA was predicting recently. The drops in the forecasts are due entirely to expected declines in refinancings, which are now estimated at $2.1 trillion for this year and only $430 billion next year (versus the previous estimate of $833 billion), the MBA said. "We have been forecasting mortgage interest rates to slowly increase, eventually drying up the refinance markets, but the recent upsurge in rates has moved that event forward," said Douglas Duncan, the MBA's chief economist and senior vice president of research and business development. Mr. Duncan added, however, that he expects rates to fall from recent highs "because current levels are not in line with economic fundamentals." The association can be found online at http://www.mbaa.org.