Total residential mortgage production, though still strong by historical standards, will decline each year through 2007, according to a forecast by the Mortgage Bankers Association that projects economic growth of about 3.5% for the period.The forecast calls for total production of $2.542 trillion this year, consisting of $1.559 trillion in purchase loans and $983 billion in refinance loans, a refi share of 39%. The MBA is predicting total volume of $2.206 trillion (31% of it refis) for 2006 and $2.115 trillion (26% refis) for 2007. However, purchase loan volume is seen rising from $1.517 trillion in 2006 to $1.556 trillion in 2007. The MBA is also projecting that home sales will fall over the next three years, but remain at historically high levels. The forecast calls for new-home sales of 1.12 million this year, 1.01 million in 2006, and 976,000 in 2007, and resales of 6.14 million, 5.70 million, and 5.61 million, respectively. Employment in the mortgage industry has been increasing since August, but Doug Duncan, the MBA's chief economist, said he expects layoffs to start later this year. Mr. Duncan said he expects mortgage interest rates to rise modestly through 2007: about 50 to 65 basis points this year, reaching about 7% for a 30-year, fixed-rate mortgage by the end of 2007. The MBA can be found online at http://www.mortgagebankers.org.
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