Single-family originations should total $340 billion for the fourth quarter, according to the Mortgage Bankers Association's latest estimates, which would push total originations close to $1.5 trillion for 2010.
As recently as October, MBA economists were expecting the usual seasonal slowdown would cap fourth quarter volume at $240 billion. But with mortgage rates staying below 4.5%, refinancings took off.
Looking ahead to next year, the trade group is sticking with its forecast that originations will drop to $1 trillion, according to MBA vice president Michael Fratantoni.
This forecast is being reinforced by the recent spike in interest rates.
Mortgage rates could hit 5% "this week," Fratantoni said told NMN. "I won't be surprised if we didn't get close to 5.5% by the end of 2011."
Some refinancings in the pipeline won't close until the first quarter. But refis will fade and purchase volume will total $650 billion or 65% of 201l originations, according to the MBA forecast.
Meanwhile, MBA economists expect stronger economic growth and more hiring next year with the Federal Reserve's quantitative easing and Congress' likely extension of the Bush tax cuts.
But the MBA vice president for research and economics said the unemployment rate will still be around 9% by year-end 2011.
