Depending on who you ask, next year’s residential originations could vary by $400 billion. But one thing the experts agree on is that business during 2011 will be worse than this year.
Next year’s home-loan originations are expected to come in between $0.904 trillion and $0.991 trillion, according to the 2011 – 2015 U.S. Total Mortgage Volume Forecast from iEmergent. Based on the number of loans, iEmergent predicts between 4.8 million and 5.25 million loans.
In June, the Des Moines, Iowa-based company projected that residential volume during 2010 would range from 5.62 million to 6.19 million loans for between $1.03 trillion and $1.14 trillion.
“iEmergent projects that U.S. residential mortgage lending volume will fall below the $1 trillion mark in 2011, becoming the fifth year of what is emerging as a ‘lost decade’ for the housing and home financing industries, with slow growth also expected for 2012-2015,” the company said in today’s statement.
iEmergent’s outlook is much weaker than at the Mortgage Bankers Association, which forecasted that U.S. production will come in at $1.401 trillion this year then fall to $0.996 trillion in 2011.
Freddie Mac has volume falling from $1.500 trillion this year to $1.3 trillion, while Fannie Mae predicts 2010 volume will be $1.497 trillion then drop to $1.208 trillion next year.
iEmergent projected that 2011’s activity will include 2.62 million purchase loans for $0.491 trillion. Refinances are expected to range from 4.80 million loans for $0.904 trillion to 5.25 million loans for $0.991 trillion.
The report indicated that the pool of prospective borrowers has declined by 38 percent as a result of the 2007-2010 economic collapse.
“The home financing industry is now caught in a serious ‘demand trap,’ a negative feedback loop of economic and behavioral deflation,” iEmergent President Dennis Hedlund said in the statement. “Similar to the liquidity trap that spawned it, mortgage rates have reached unprecedented low levels, yet purchase money mortgage demand languishes as prime home buyers are trapped by cumulative downward economic and job pressures.”
