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Refis to Drag Down 2010 Originations

Mortgage News

A mild decline in purchase financing this year will be overshadowed by a big drop in refinance transactions.

Residential loan originations are expected to reach between $1.09 trillion and $1.20 trillion during 2010, according to iEmergent — a marketing analytics firm. Based on the number of loans, volume is projected at between 5.76 million loans and 6.34 million loans.

The report noted that despite some bursts of activity during this year — any momentum will be unsustainable.

Home financing options will reach a trough this year, the Des Moines, Iowa-based firm said.

Purchase volume is expected to account for $556.9 billion of this year’s activity, or about 2.99 million loans. Forecasted purchase fundings are 5 percent lower than 2009 activity.

But the forecast for refinance originations is less clear, with between 2.77 million and 3.35 million loans expected to be funded for between $531.1 billion and $643.0 billion. The refinance prediction is off by around half from last year’s volume.

The severe decline in refinance transactions this year and possibly next year “creates considerable risk for lenders of all sizes, especially those that relied heavily on refinance transactions in 2009,” iEmergent said.

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