Despite the upgraded expectations itrnappears that 2011 will end up with a lower volume in every quarter of the yearrnthan was seen in 2010, and MBA does not see any growth in the comingrnyear.  “Despite lower forecasted mortgage rates, weaker projectedrneconomic growth in 2012 led to a reduction in MBA’s origination forecast forrnthat year to $931 billion, which would be the lowest volume originated sincern1997.”  The estimate for 2012 is a downgrade of about $30 billionrnfrom earlier predictions. </p

Estimated and Actual Mortgage Volume</p<table style="height: 52px" border="1" cellpadding="0" cellspacing="0" width="516"<tbody<tr<td valign="top" width="87"

Year</p</td<td valign="top" width="93"

Q1</p</td<td valign="top" width="96"

Q2</p</td<td valign="top" width="90"

Q3</p</td<td valign="top" width="96"

Q4</p</td<td valign="top" width="108"

Total</p</td</tr<tr<td valign="top" width="87"

2010</p</td<td valign="top" width="93"

$342</p</td<td valign="top" width="96"

$367</p</td<td valign="top" width="90"

$401</p</td<td valign="top" width="96"

$462</p</td<td valign="top" width="108"

$1,572</p</td</tr<tr<td valign="top" width="87"

2011</p</td<td valign="top" width="93"

302</p</td<td valign="top" width="96"

290</p</td<td valign="top" width="90"

294</p</td<td valign="top" width="96"

223</p</td<td valign="top" width="108"

1,019</p</td</tr<tr<td valign="top" width="87"

2012</p</td<td valign="top" width="93"

225</p</td<td valign="top" width="96"

262</p</td<td valign="top" width="90"

253</p</td<td valign="top" width="96"

191</p</td<td valign="top" width="108"

931</p</td</tr</tbody</table

(Figures in $billions)</p

Refinancing is estimated to accountrnfor $191 billion or 65 percent of the volume in Q3, $129 billion (58 percent)rnin Q4 and 63 percent for the entire year.  Even though the volume ofrnmortgages is predicted to decline next year, the share of purchase mortgagesrnwill increase to 57 percent of the total.</p

Jay Brinkmann, MBA’s Senior VicernPresident of Research and Education and Chief Economist said there have beenrnmany unprecedented events over the past month including the debt ceilingrncrisis, S&P’s downgrade of US debt, the debt crisis in Europe, a commitmentrnand a high level of stock market volatility.  </p

“While there is substantialrnuncertainty about how these events will impact consumer and businessrnbehavior,” Brinkmann said, “we do not believe that the economy isrnfacing the same types of risks as in 2008.   Were the US economy tornenter a recession, it would likely be the result of an external shock, andrnwould be shallow and relatively brief.  On the other hand, given that bothrnfiscal and monetary policymakers’ options are limited at this point, it wouldrnbe difficult for policy changes to soften any blow.”</p

Brinkmann continued, “Asrnnegative as much of this outlook appears to be, there are some indicators thatrnhave been more promising.  None of these factors suggest any strongrngrowth, but in total they do suggest a path out of this slowdown. Thus, we havernrevised our projections from previous estimates for GDP growth downward fromrn1.9 percent growth to 1.5 percent growth for 2011 and from 2.8 percent growthrnto 2.3 percent growth in 2012. Given the overall path of economic growth, wernexpect that the unemployment rate will stay above 9 percent for the remainderrnof 2011 and drop only slightly below 9 percent by the end of 2012.”</p

“Nothing in the housing marketrndata suggests any significant change from our previous expectation of arnfrustratingly slow period with lackluster sales volumes.  Purchasernapplication volumes remain stuck at low levels, and even fell further inrnresponse to the volatility surrounding the events described above. </bRelative to last month, we have reduced our estimate for purchase originationsrnin 2012 significantly, matching our more pessimistic outlook for the economy,rnthe job market, home sales, and home prices.  We still see purchase volumernincreasing in 2012 relative to 2011's volume of $412 billion, but now see justrna little more than $100 billion of increase on a year-over-year basis."</p