MBA Hikes Origination Forecast to $2.6 Trillion

Six months ago at its annual convention, the Mortgage Bankers Association was looking for $1.8 trillion in loan originations in 2003.Two months ago, the MBA raised its forecast to $2 trillion. Now, Chief Economist Doug Duncan expects this year's volume to reach a "best ever" $2.6 trillion. "Half of that is already in the pipeline, so it's not too much a stretch" to believe loan production this year will top last year's record of $2.5 billion, Mr. Duncan said at the MBA's National Secondary Market Conference in New York. The economist expects 58% of this year's total to be refinancings, just about the same as the 59% recorded in 2002. But he thinks home sales will remain flat. Mr. Duncan also predicted "only a modest uptick" in mortgage rates over the year, to 6.1% in the third quarter and 6.3% in the fourth. "Rates will rise through the end of the year, but only modestly," the economist said. As for the overall economy, Mr. Duncan said jobs remain key. "War is on everyone's mind, but at the end of the day, jobs are what is going to make the difference," he said. Unfortunately, he is looking for the unemployment rate to rise. Over 400,000 jobs have been lost of the payroll side in the last two months, he pointed out.