It is unlikely that purchase mortgage origination volume will top $530 billion this year, as the negatives in the economy far outweigh the positives, said market research firm iEmergent.
The company is basing its latest forecast of $528 billion (a cut of over 5% from its previous projections) in purchase loans on increasingly wary customers, the shift forward in purchase patterns caused by the tax credit, a projected rise in interest rates by the end of the year, falling home prices and a slight decrease in average loan size.
In the first quarter of the year, the firm projected $557 billion in purchase volume for 2010. It has also cut its refinance forecast by 5% from between $531 billion and $643 billion down to a range of $504 billion to $610 billion. This brings the total volume projection to between $1.03 trillion to $1.14 trillion.
Dennis Hedlund, president of iEmergent, said "The second half of this year looks to be a continued struggle for U.S. households, and by default-no pun intended-for the home financing industry. There are not enough positives to fuel a big upswing in the housing market, because the demand-side-U.S. households and homeowners-remain stuck in big negatives. Job anxieties, extended under- and unemployment, the existence of too much debt, no savings, tougher credit, foreclosures, and mistrust of banks are just a few of the negatives that will smother consumer confidence for the rest of the year and likely into 2011."
