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| A revised origination forecast is calling for a big increase in this year’s refinances as a result of recently passed legislation. But the report also warned that service levels will be strained and rates will head higher by the end of the year.During 2009, iEmergent forecasts total mortgage originations of 9.5 million loans for $1.651 trillion, according to its 2009 – 2013 Mortgage Volume Forecast released yesterday. The projection is up from the firm’s September 2008 forecast, when this year’s production was expected to range from 8.9 million loans for $1.533 trillion to 9.3 million loans for $1.607 trillion.
The increase was attributed to the $800 billion American Recovery and Reinvestment Act, which was signed into law last week. In Freddie Mac’s February 2009 Outlook released earlier this month, residential originations were projected to reach $2.000 trillion this year, rising from $1.784 trillion in 2008 and $349 billion higher than iEmergent’s latest projection. iEmergent said in its latest forecast that this year’s purchase volume is projected to reach 4.4 million loans for $0.735 trillion, lower than September’s estimate of 4.95 million loans for $0.838 trillion. The forecast indicated refinance volume will reach 5.1 million loans for $0.916 trillion during 2009, jumping from the earlier estimated range of between 3.9 million units for $0.696 trillion and 4.3 million units for $0.769 trillion. “The projected 55 percent growth in refinance volume from iEmergent’s forecasts of five months ago is explained by the expectation that financial stability plan solutions will maintain downward pressure on mortgage rates, unfreeze credit and slow the rate of home price declines,” iEmergent explained. But the Des Moines, Iowa, firm also warned that refinance activity could be offset by deteriorating employment, a negative outlook and “the eventual halt of interest-rate decline as the federal deficit forces mortgage rates higher by the end of the year.” iEmergent President Dennis Hedlund speculated that mortgage demand in many local markets will remain weak this year as government actions slowly begin to impact the housing and credit markets. “We expect refinance volumes to be very volatile throughout the year, causing many response and service problems,” Hedlund said. |
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