MBA Hikes '04 Forecast, With Caveat

The Mortgage Bankers Association hiked its production forecast for 2004 on Wednesday but cautioned that the Federal Reserve could tighten credit sooner than most think -- maybe even by June.The MBA now believes that residential production will total $2.6 trillion this year, compared with its January forecast of $2 trillion and an April update to $2.5 trillion. The trade group's chief economist Doug Duncan said he believes the yield on the 10-year Treasury -- which has been rising steadily for two weeks -- should end the year at 4.4%. (At the close of business Wednesday, the 10-year was yielding 4.38%.) Mr. Duncan said that even though the yield has been increasing of late, he is confident that the run-up is not sustainable. Until recently many economists believed the Fed would not hike short-term rates until December, but better-than-expected job numbers and retail sales have spurred many Fed watchers to change their minds. (See the April 19 issue of National Mortgage News for more details.)