MBA Sees Rosy Years Ahead

Home sales will set record highs this year and retreat only moderately in 2006 and 2007 while 30-year fixed mortgage rates rise but remain historically low, according to a long-term economic forecast by the Mortgage Bankers Association.The latest update to the MBA's three-year forecast also calls for robust average economic growth of 3.5% through 2007 and a steady unemployment rate that will decline to 4.9% by the beginning of 2007. Under the forecast, existing-home sales will rise 2% to a new record this year and decline about 3% in 2006 and 2% in 2007, while new-home sales will also rise about 2% to a record high and then fall about 4% and 3% in the next two years. "Long-term rates should gradually increase from current levels by 20 to 30 basis points by the end of 2005, and another 40 to 50 basis points during 2006, finally reaching about 6.25% for a 30-year, fixed-rate mortgage in 2007," said MBA chief economist Doug Duncan. The MBA can be found online at http://www.mortgagebankers.org.