As mortgage banking leaders gather in San Francisco for the trade’s annual conference, it’s clear that the free-wheeling good times that characterized recent years are long gone. Than sentiment has been replaced by a sense of gloom over what lie ahead for much of the nation’s housing and mortgage markets. Such a sentiment clearly went into the group’s updated forecast for the mortgage industry in 2009 and beyond, as well, with MBA chief economist Jay Brinkmann suggesting Tuesday afternoon the nation would be in a recession through the middle of 2009. “A recession appears to be underway, as evidenced in rising unemployment, contracting manufacturing activity and declining inflation-adjusted spending,” he said in remarks to reporters in San Francisco. “We expect residential investment to decline further through the first half of 2009, due to the excess supply of houses and weakened demand from the recession.” Brinkmann believes the recession the U.S. is now facing will be longer than most the nation has faced, he said, as well. The trade group is now forecasting that unemployment will reach 7.8 percent by the first part of 2010, before beginning to decline later that year, despite mortgage rates that are expected to remain around the 6 percent level through most of next year. Jobs drive much of the mortgage market, meaning that while the real economy may recover sooner, the mortgage market may lag the broader economy in its own sort of recovery. “People buy houses based on whether they have a paycheck,” Brinkmann said. The MBA economist said he believes that job recovery will be slow coming out of the current recession, echoing the sentiment of more than a few economists that have suggested the same idea recently. As a result, the group is predicting that purchase originations for 2008 will come in at $912 billion, 20 percent below the $1.14 billion funded in 2007. Total originations, including refinancing activity, are projected to total $1.861 billion in 2008. The group predicts a further fall in originations during 2009, to $1.666 billion, another 10.5 percent drop from 2008’s dismal expectations, before originations begin a modest increase in 2010. The group said it is not expecting originations to reach 2007 levels — a total that was already affected the burgeoning mortgage crisis, relative to previous years — at any time in the next five years.
MBA Forecasts Recession, 7.8 Percent Unemployment
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