MBA Cuts Origination Forecast

The Mortgage Bankers Association has joined Fannie Mae and Freddie Mac in revising origination projections downward for this year, cutting its forecast from $2.6 trillion to $2.4 trillion.In its monthly Mortgage Finance Forecast for May, the MBA predicted that refinancings will total $1.0 trillion, down from the previously forecast $1.2 trillion, and that mortgages for purchasing homes will make up 57% of total originations, or $1.4 trillion. (Fannie Mae recently lowered its 2004 mortgage origination forecast from $2.58 trillion to $2.30 trillion, and Freddie Mac lowered its forecast from $2.8 trillion to $2.4 trillion.) MBA chief economist Doug Duncan said the Federal Reserve is likely to begin raising rates in June because of strong employment and production growth and rising inflation pressures. "Our forecast has for some time anticipated that the Fed would wait until late this year before starting to raise short-term interest rates, but the growth of the economy has accelerated and raised the likelihood of a near-term rate increase," he said. The MBA now projects that the average 30-year fixed mortgage rate will increase to 6.4% in the fourth quarter. The MBA can be found online at http://www.mortgagebankers.org.