Home lending in the U.S. will fall below $1 trillion next year to the lowest level since 1996, according to the Mortgage Bankers Association.
Originations will decline to $996 billion in 2011, from a projected total of $1.4 trillion this year, the trade group said today in a statement released during its annual conference in Atlanta. Lending reached a record $3.8 trillion in 2003 as refinancing soared, with new loans then remaining elevated over the next few years as home prices and sales boomed.
A rush by U.S. homeowners to refinance at near record-low interest rates has marked a rare bright spot for the mortgage industry, under attack for choking the economy with shoddy loans and botched foreclosures. This year’s estimated $480 billion of mortgages for home purchases would be the lowest total since 1993, Jay Brinkmann, the group’s chief economist, said today.
Total home lending will drop next year because refinancing will fall “as mortgage rates increase and the pool of eligible borrowers shrinks,” the Washington-based group said in the statement. More home-purchase loans will offset some of that decline, as “existing home sales recover and home prices stabilize.”
The association’s estimates for total lending have declined from its forecast last month for $1.45 trillion of originations in 2010 and $1.06 trillion in 2011.
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