Mortgage Bankers Assocation expects mortgage activity to slow

Posted by: Prashant Gopal on June 22, 2009

The Mortgage Bankers Association today significantly lowered its 2009 mortgage origination forecast to 2.03 trillion, a drop of $700 million below its March projection. The primary reason: higher interest rates. Interest rates climbed from 5.19 on March 25 to 5.76 on June 17, according to Bankrate.com.

Rising interest rates have put a serious damper on refinancing.

“The March increase in refinance origination was driven by two factors,” Jay Brinkmann, the group’s chief economist said in a prepared statement. “The subsequent increase in interest rates, however, began to choke off the refinance wave in May, much earlier than expected in the March forecast.”

Brinkmann said another reason the group lowered the forecast was the weak response so far to the Home Affordable Refinance Program being overseen by Fannie Mae and Freddie Mac. The Obama administration said in March that it expected 1.5 million to 2 million borrowers to take advantage of the program, which is designed to help borrowers who are current on their payments to refinance up to 105% of a home’s value. But only 13,000 loans have been refinanced through the program, although Brinkmann said he expects the numbers to rise over time.

Interestingly, the MBA is forecasting that interest rates will rise through the end of the year and through 2010. Other analysts say they expect interest rates to fall.

Reader Comments

Sue

June 24, 2009 11:23 AM

I have tried 4 times since Oct 2008 to refinance with my lender Countrywide (now Bank of America) and they have not even had the decency to send me a turn down letter but they are turning the loan down simply by not doing anything. It's not that people haven't tried...it's the lenders who are not doing their jobs...again! Banks are becoming just like the Oil Cartels...buying up little banks and spending the money to become bigger to take total control just. AMERICANS are footing the bill and there are no guarantee the tax payer will be reimbursed.

Bonnie

June 25, 2009 03:20 AM

My daughter and son inlaw ,whom live in San Ramon California . Have tried to refinace their mortgage while they were still current on their payments. but their financial situation has change. Only for their bank to tell them they can not recieve help unless they are at least two months behind. So this will just put them close to forclosure. And then they are not sure if they will get help. If they could refinance they could get by and aleast pay their mortgage .

Robert Lowder

June 25, 2009 06:59 AM

I was kept on the string for 4 (four) months and was never formally turned down. (American Financial Serv.) I finally quit in desperation, but I paid $350 for appraisal, and I now have a file folder 2" thick and have resigned myself to live with my 8.25 loan rate.

Robert Lowder

June 25, 2009 06:59 AM

I was kept on the string for 4 (four) months and was never formally turned down. (American Financial Serv.) I finally quit in desperation, but I paid $350 for appraisal, and I now have a file folder 2" thick and have resigned myself to live with my 8.25 loan rate.

Rosa Perez

June 25, 2009 04:12 PM

I agree with Sue, the banks are not doing their jobs. They keep procrastinating and similar to Bonnie’s case my ex walked out on his family of eight years leaving me alone with a 4 year old, a house note, business loans for a business he took with him, credit that he ran up under my name and the list goes on. But what’s most heart breaking is even though I managed well for a while, work started to slow down and when I had just two months worth of expenses in savings, I called the bank (Wells Fargo) explain what had happened and was looking for help. They told me they could not help me because I needed to be three months behind in order to quality for any assistance. To make a long story short I have been in a 13 month ordeal with Wells Fargo Bank. I have been trying to do a short sale, have even gotten cash and close to appraisal value offers and the bank just refuses them. Or like they did with my first offer. They made this man wait 6 months before they actually took a look at his offer. My home in the early part of last year appraised at $ 47 K a year later at $34K and my loan is $122K how does this make any sense. I have but one question. Did these bank not already collect on our so called bad loans? If so why are they not trying to help their customers instead of trying to make more money on a “bad Loan” they already got compensated for? How is the banking helping anyone?

Victoria Ulery

June 25, 2009 05:47 PM

We started in Sept. 2008 for a simple refi. Got discusted with the first try because of being told one lie after another. Tried again for a FHA loan in Jan.09, was approved in March 09. We have paid for 2 appraisals, they then wanted a third, we told them we would not pay for another one. WE are still waiting. Our credit report has been dinged several times, because they keep checking. Every month they ask for another copy of the same personal records, and still we wait. We are being told every 3 weeks or so, they are way behind and to wait. If we ran our personal lives this way. we would have all starved to death. Disgusted in Oregon.

Eugene Neal

August 4, 2009 03:15 PM

I am one of the top originators with my bank because I listen to my clients needs and I create loans that help them accomplish their goals. Please email me with your contact information and then let me know the best time and number to contact you back at regarding your refinance. My goal is to provide you with the best loan based upon your current Mortgage situation. I also will let you know as to why your loan was unable to be approved. Some banks don't understand that their family could be the voice on the other line, I do.

edythe postlethwait

September 22, 2009 06:28 AM

I was turned down after four months with bank of american. They said that at first their was no problem to get the loan, then they said no.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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