Industry NewsMortgage

Home loans to drop in 2006

Mortgage group expects slowing home sales, growing economy

Observers of the housing market can breathe a sigh of relief, with strong economic growth projected for 2006 and moderate growth in 2007, a mortgage banking group said in its long-term forecast released today. The Mortgage Bankers Association is predicting growth of 3.5 percent in the gross domestic product for 2006, with moderate, below-trend growth of 3.3 percent in 2007, the group said Total residential mortgage production in 2006 will be $2.24 trillion, the fifth-biggest year on record, but a 19.5 percent decrease from 2005. Existing-home sales will probably fall by 4.7 percent in 2006 and by 4.4 percent in 2007, remaining flat in 2008, the association said. New-home sales will likely drop 4.3 percent in 2006 and 4.9 percent in 2007, according to the MBA. "We expect economic growth to remain solid in 2006, but we will begin to see below-trend growth for 2007," said Doug Duncan, the MBA's chief economist. Duncan predicted housing would decline modestly compared to 2005, its fifth c...