|Title: ||MBA Reaffirms Originations Outlook for Second Half of 2013, Lowers Outlook for US Economy|
WASHINGTON, D.C. (July 25, 2013) — The Mortgage Bankers Association (MBA) today reaffirmed its outlook for mortgage originations in the second half of 2013
but lowered its forecast for US economic growth. MBA expects originations in the second half of the year to total $606 billion,
up from the $527 billion it had forecast at the beginning of the year but down considerably from the estimated $976 billion
in originations during the first half of the year.
The increase in the forecast is due almost entirely to carryover refinance loans originated during the second quarter that
will close in the third quarter. Purchase loan originations during the second half of the year are expected to total $312
billion versus the $299 billion originally forecast.
MBA expects economic growth to average 2.2 percent in the second half of the year versus the 2.4 percent originally forecast,
with the declines mainly due to reduced fixed residential investment and reduced government expenditures. MBA expects the
unemployment rate to be at the 7.5 (3rd quarter) and 7.3 (4th quarter) percent levels forecast at the beginning of the year
but cautions that inflation over the next several months will be sharply higher due to higher oil prices and housing rental
MBA expects the purchase mortgage rate as reported in the Freddie Mac weekly survey to average 4.4 during the third quarter
and 4.7 percent during the fourth quarter, about 20 to 30 basis points higher than was forecast at the beginning of the year.
“As we said at the beginning of the year, the big unknown for origination volumes was the timing of the market reaction to
any statements from Federal Reserve officials regarding the phasing out of quantitative easing and the impact on refinance
volumes. While the magnitude of the rate increase was larger than we had forecast, the timing of the increase and the impact
on refinance volumes was pretty much in line with what we had expected,” said Jay Brinkmann, MBA’s chief economist.
“Part of the reason for the increase relative to our prior forecast for refinance originations for the third quarter is that
lenders reported to us a jump in pull-through rates as a result of the rate jump. Loan applicants were doing whatever they
could to protect their locked-in rates so the applications volume at the end of the second quarter translated into a higher
number of fundings in July.
“Overall economic growth will be slower than originally forecast and we were not forecasting particularly robust growth to
begin with. Consumer spending will be somewhat higher, with the auto and energy-related manufacturing sectors continuing
to improve. We saw a sharp pickup in residential housing investment in the second quarter, higher than what we were expecting.
As a result, we expect that housing investment will continue at current levels but will not be the driver of growth that we
had expected in the second half of the year.
“We still face several unknowns that are impacting economic growth. First, the situation in Europe is far from settled.
While there are signs of growth in some of the stronger economies, the austerity measures in several southern European nations
are facing increasing political opposition with no clear alternatives. Second, the political situation in the Middle East
could flare up and already the situation in Egypt has driven up the world price of oil. Third, developments in China could
impact that nation’s ability to invest in US and other international securities. Finally, the domestic uncertainty over tax
rates and what sections of the national health care law will be enforced and when continue to hold back small business hiring
“Against this backdrop, we expect to see employment grow in the range of 175,000 jobs per month. However, a greater share
of these jobs has been part-time or lower wage. The result is that we are unlikely to see these increases in jobs translate
into the same household formation rates and demands for homes that we saw in the past for similar increases,” Brinkmann said
For the most recent forecast and commentary, please visit our webpage at:
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, Wall Street conduits, life insurance companies and others in the mortgage lending
field. For additional information, visit MBA's Web site: www.mba.org.