MBA Sees Higher Mortgage Rates and Reduced Refinance Demand in 2011

ThernMortgage Bankers Association (MBA) has peered into the future and has come uprnwith a two year forecast that will not brighten its audience’s day.  The MBA, which represents over 2,200rncompanies in the real estate financing business, sees business uncertainty andrncontinued unemployment hurting the industry for at least another year.</p

Jay Brinkmann, MBA’s ChiefrnEconomist and Senior Vice President for Research and Economics said, “Economicrngrowth in 2010 has been subdued and this trend will likely continue for most ofrn2011. Households remain cautious given the weak job market.  On top ofrnthat, uncertainty regarding tax rates for next year, and the potential for taxrnwithholding to increase at the beginning of the year, lead us to forecast thatrnconsumer spending will remain weak, particularly in the first half of 2011.” rn</p

Brinkmann said that severalrnfactors are driving the forecast.  Thernsluggish economy, weak private demand for debt financing, and low inflation arernkeeping downward pressure on rates, while increases in government financingrnrequirements and the weakening dollar are offsetting the other factors. “Inrnaddition, there is much speculation surrounding what the Federal Reserve willrndo in terms of additional monetary policy actions to stimulate growth. FOMCrnparticipants, in their respective speeches over recent weeks, have communicatedrndifferent perspectives on the issue. At this point, we think the most likelyrnscenario is that the Fed will purchase additional Treasury securities, but thatrnthe market has already priced these anticipated actions into today’srnrates.  In other words, absent some blockbuster post-election announcementrnfrom the Fed on November 3rd, we do not expect to see a further decline inrnrates.”   </p

Here is a summary of the MBA’s outlook…</p<ul