MBA Refi Shocker: Originations May Spike 75% in '09

Residential lenders could originate nearly $2.8 trillion in single-family mortgages this year — a stunning turnaround from last year when fundings totaled about $1.6 trillion, according to a new estimate made by the Mortgage Bankers Association.If MBA's prediction comes true, it would make 2009 the fourth best year ever for fundings. (The $1.6 trillion figure is courtesy of National Mortgage News' Quarterly Data Report.) It also would help turn around an industry that is coming off its worst year since 2000 and has seen hundreds of non-bank and depository funders fail. MBA estimates that refinancings could hit $1.96 trillion this year, a 150% spike from 2008. The new bullish estimate comes in the wake of recent aggressive efforts by the Federal Reserve to buy GSE-backed mortgage securities in an effort to drive rates dramatically lower. Mortgage rates could hit "lows not seen since the early 1950s and late 1940s," MBA chief economist Jay Brinkman said. Even with low mortgage rates, it is unlikely to stimulate home sales "until we see some stabilization of employment," the MBA economist said. He estimates purchase mortgage originations will total $851 billion this year, down slightly from 2008.