MBA Increases Originations Estimate for 2012 by Almost $200 Billion

Published: May 24, 2012

Washington, DC (May 24, 2012) — The Mortgage Bankers Association (MBA) today announced it is increasing its mortgage origination forecast for 2012 by almost $200 billion, due entirely to an increase in refinances. MBA now expects that mortgage originations will reach $1.28 trillion in 2012, up from $1.26 trillion in 2011.

Refinance originations are now expected to total $870 billion in 2012, an almost identical amount to 2011. MBA is slightly lowering its purchase originations forecast for 2012 from $415 billion to $409 billion.

This month’s refinance estimate for 2012 reflects an upward revision of $188 billion from MBA’s April forecast, driven by an increase in the pace of refinance applications and originations, while purchase origination estimates were revised downwards by $6 billion to reflect lower than previously expected home prices and weaker than previously expected home sales.

“Scenarios we have consistently highlighted that could drive rates down and refis up have materialized, primarily due to market turmoil in Europe,” said Mike Fratantoni, MBA’s Vice President of Research. “Deterioration of the debt situation in Spain and Greece and a new regime in France that is a weaker proponent of European austerity, along with slower economic growth globally, have driven the US Ten Year Treasury yield down. Thus, we are projecting lower U.S. mortgage rates for the rest of the year and raising our refinance forecast as a result.”

“The increase in our estimated refinance activity is largely independent of the HARP 2.0 initiative. We factored HARP lending of roughly $100 billion in both 2012 and 2013 into our April forecast, and the HARP share of refinance activity has remained relatively constant over recent months. However, mortgage rates below four percent and regular media coverage showcasing ‘record low mortgage rates’ provide sufficient incentive and impetus for borrowers to examine their current rate. Additionally we have revised our estimates for the first and second quarter of 2012, based on additional information from GSE securitization data and a refinement in pull-through assumptions from our Weekly Applications Survey.”

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, REITs, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.

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Matt Robinson                                    
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