Industry NewsMortgage

Bankers expect 18% decline in mortgage originations in ’08

Home sales, prices not expected to rebound until late next year

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BOSTON -- Mortgage originations are expected to fall 18 percent in 2008, dropping below the $2 trillion mark for the first time since 2000, the Mortgage Bankers Association said Tuesday. Although economic fundamentals remain sound, housing is "clearly in a deep recession," said MBA Chief Economist Doug Duncan, briefing reporters at the group's annual convention in Boston. Duncan expects the pace of home sales to remain below 2007 levels until late next year, and said prices could continue to decline beyond that before flattening out in 2009. After adjusting for inflation, Duncan said real housing prices could fall by 7 to 8 percent this year and next. Much depends on what happens in credit markets, where worries about declines in the value of securities backed by mortgage loans have spread to other forms of asset-backed securities, Duncan said. It could be nine months before investors in such securities regain their confidence, he said. In the mean time, a "massive su...