Lewis Ranieri, the co-inventor of MBS, believes the yield on the 10-year Treasury could fall to as low as 2.5% this year.
Friday morning, the 10-year was at 2.94%, two days after it broke through a recent floor of 2.9%.
In an email exchange with National Mortgage News, he offered no color on his prediction. But if his forecast comes true, it means mortgage rates could fall further (from their already historic lows) and lenders could benefit from a refinancing wave.
Currently, refinance applications are outpacing home purchase ones by roughly eight-to-two, according to figures compiled by the Mortgage Bankers Association.
Lenders are concerned that if home purchase activity does not pick up steam soon, they may have to start cutting workers unless refis really soar.
"As recently as four weeks ago, volumes were really down," said Scott Stern, CEO of Lenders One, a cooperative of community-based mortgage bankers. "But with rates falling again we're seeing more action."
Stern is concerned, however, that refis will not sustain the industry forever and that home purchases are essential to a true revival for all players, large and small alike. "Where have all the homebuyers gone?" he asked.