Industry News

Real estate market will continue strong

Trade group forecasts gradual rise in mortgage rates

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The Mortgage Bankers Association is forecasting continued but moderated economic growth with interest rates reaching about 5.9 percent by the end of 2004. "We are forecasting only a modest increase in rates despite the continued expansion of the economy," said Doug Duncan, MBA's senior vice president and chief economist. "As long as rates remain at these levels, home-buying will remain an attractive alternative to renting, and the purchase market will continue strong." MBA's forecast calls for purchase originations to decline from an expected $1.48 trillion in 2004 to $1.45 trillion in 2005 and $1.44 trillion in 2006. The refinance market is expected to decline from $1.19 trillion in 2004 to $0.68 trillion in 2005 and $0.46 trillion in 2006. As a result, refinance mortgages will account for only 32 percent of the mortgage market in 2005 and 26 percent in 2006. The forecast also predicts that 30-year fixed-rate mortgages will increase gradually to 6.5 percent by the end of 2005 and...