| Are Refis Headed for Crash Landing?
Fannie’s chief economist says yes, in a big way July 10, 2003 By MortgageDaily.com staff |
| The refinancing wave is set to wash out next year, according to a leading industry economist.
David Berson, chief economist for secondary lender Fannie Mae, predicted a more than 200 percent drop in refinancing activity for 2004, compared to the current year. “We’re looking for refinance originations this year to come in at about 2.6 trillion dollars, which is a record. But next year we think that’s going to tumble to only about 850 billion dollars,” he said during a conference call presented by the Homeownership Alliance Wednesday. Berson’s comments came during a question-and-answer session which followed the main presentation, which consisted of five leading industry economists discussing their economic forecasts for the rest of 2003. Berson said that the impending refinancing plummet would be a market response to a predicted rise in mortgage rates. “Now on the refinance side though, that responds completely, or almost completely to what’s happening with mortgage rates,” he said. “If mortgage rates move up over the next year then refi activity is going to fall, and we think it’s going to fall quite a bit.” Currently refinances garner about 75 percent of total mortgage applications. Other analysts participating in the call also forecasted a fall-off in refinancing activity for 2004, though none gave as specific a prediction as Berson. Paul Merski, chief economist for the Independent Community Bankers of America, said during his portion of the call that the refinancing boom was already ebbing. “[The] recent wave of refis probably peaked in about May of this year,” Merski said. David Seiders, chief economist for the National Association of Home Builders, also predicted a slowdown in refinance activity in 2004 in the question-and-answer session following the main presentation. |
