Single-family originations will decline by 16% in 2008 and drop below $2 trillion for the first time since 2000, according to the Mortgage Bankers Association. Originations will total $1.94 trillion in 2008, down from $2.37 trillion last year, as home sales continue to decline into the third quarter and refinancing activity remains sluggish, the association is forecasting. "We do not expect a large pickup in refi activity," MBA chief economist Doug Duncan said, despite expectations that the Federal Reserve will continue to cut interest rates. Mr. Duncan pointed out that refinancings will be constrained due to tighter lending standards, declining house prices, and larger-than-normal spreads between Treasury and mortgage rates. Nevertheless, refinancing will make up 51% of originations this year, compared with 50% in 2007, the trade group predicts. The MBA chief economist also noted that banks are running up against their capital limits as they write down the value of their mortgage assets. "Fortunately, the banking system entered the current credit crunch well capitalized, so the danger of a sharp and widespread contraction of credit availability does not seem imminent," he said. The MBA can be found online at http://www.mortgagebankers.org.

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