The Mortgage Bankers Association is projecting gross domestic product growth rates to exceed 4% each year through 2006.

The MBA also predicts that the 10-year Treasury rate will rise to an average 4.5% by the fourth quarter of 2004, and will continue to rise to reach 5.4% in 2006. Mortgage rates will follow a similar pattern, although the spread between mortgage and Treasury rates is expected to tighten.

The employment rate is expected to decline from its current level of 5.7% to about 5.2% by the middle of 2006.

Existing home sales are projected to remain at historically high levels, even as they come off record levels and fall by 5.1% in 2004 and a further 3.6% in 2005. They are expected to remain more or less unchanged in 2006.

New home sales are expected to fall by 7.2% in 2004, and by 3.3% in 2005, and are also expected to stabilize in 2006.

Home-price growth is expected to be modest, with existing-home prices increasing by 5.5% and new home prices increasing by 3.7% in 2004. Growth for both existing and new-home prices is expected to be in the 4% range in 2005 and 2006.

Mortgage originations are forecast at $1.1 trillion in 2004, $1.72 trillion in 2005 and $1.78 trillion in 2006. Refinancing volumes will be well below the levels seen in the past two years, but mortgage originations for purchasing homes will continue to rise to $1.31 trillion in 2004, $1.35 trillion in 2005 and $1.42 trillion in 2006.

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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