MBA Sees Mortgage Originations at 8-Year Low in 2008
Mortgage originations will fall next year to the lowest levels since 2000, forcing job losses for at least 30,000 more home finance professionals, according to a forecast released on Wednesday by the Mortgage Bankers Association.
Inventories of homes for sale will remain high as tighter lending standards across the industry reduce available credit for prospective home-buyers, said Doug Duncan, the MBA's chief economist. Foreclosures as a result of increasing payments on adjustable-rate loans or poor underwriting will exacerbate the problem, he said.
"We have not yet seen fully the impact of the credit shock to the U.S. and world economies, and the severity of that impact will depend on how long it takes for the markets to return to normal functioning," Duncan said at the annual meeting of the Mortgage Bankers Association.
Total mortgage originations will likely decline 18 percent to $1.89 trillion, the lowest volume of purchase and refinance loans since $1.14 trillion in 2000, according to the forecast. Loan volume will slide another 6 percent in 2009, it said.
Reduced volume means less business for mortgage bankers, who have already seen their ranks thinned by 60,000 to 70,000 people in the housing downturn, Duncan said. It's "tough times," he said. "Continued consolidation is to be expected in the industry."
Housing will be a drag on U.S. gross domestic product through the second quarter of 2008, Duncan said.
Existing home sales will probably fall 12 percent this year to a 5.72 million unit pace, and another 10 percent in 2008, the MBA predicted. It said sales will rebound in 2009 by 5 percent.