Industry News

Interest rates to cut into real estate refis

Trade group predicts $2.4 trillion in mortgages this year

The Mortgage Bankers Association is predicting $2.4 trillion in mortgage originations in 2004, according to its monthly update of the Mortgage Finance Forecast. Last month, MBA had estimated $2.6 trillion in originations, but now predicts a rising interest rate environment will cut into refinancings this year. Home purchases will remain strong, however. "Because of strong employment growth in March and April, rising inflation pressures and solid production growth, the Federal Reserve is likely to begin raising rates in June," said MBA chief economist Doug Duncan. "Our forecast has for some time anticipated that the Fed would wait until late this year before starting to raise short-term interest rates, but the growth of the economy has accelerated and raised the likelihood of a near-term rate increase." The average rate for a 30-year fixed mortgage will increase to 6.4 percent by the fourth quarter of 2004, the group predicts. Higher interest rates are expected to cause a slight moder...