Summary
According to the Mortgage Bankers Association's new forecast, mortgage origination volumes could plummet next year. That could be bad news for lenders that rely heavily on the refinancing side of the business.
Analysis
Mortgage rates are expected to post modest increases next year which could cut off the refinancing business. This could be bad news for lenders that rely heavily on the refinancing side of the business. But the purchase origination business in 2010 could also stall, which could be devastating for the lending industry. There are a number of risks that face the mortgage lending industry next year that are worth contemplating. The $8,000 home purchase tax credit may expire at the end of November which could inhibit future home sales. We also worry about the foreclosure situation. Foreclosure filings are expected to rise during the next several years due to rate resets on option ARM and interest only mortgage loans- which could add to home inventories, which in turn, would exert downward pressure on home values. This market situation does not bode well for home sales activity. Read this article in Real Estate Economy Watch.
David Lereah consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
