Mortgage volume prediction jumps by nearly $200 billion

June 5th, 2012

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A recent announcement from the Mortgage Bankers Association showed that there should be a significant rise in mortgage originations during 2012 compared to figures recorded during 2011, as the housing and relocation markets continue to gain ground.

In all, mortgage originations are expected to reach $1.28 trillion during 2012, which is up from 2011's figure of $1.26 trillion and a $200 billion jump from earlier projections, the report noted. Much of the increase is due to heavier refinances, with that projection up $188 billion.

Much of the positive outlook in the U.S. mortgage market may be due to outside influences, the report explained.

"Deterioration of the debt situation in Spain and Greece and a new regime in France that is a weaker proponent of European austerity, along with slower economic growth globally, have driven the US Ten Year Treasury yield down," said Mike Fratantoni, MBA's vice president of research. "Thus, we are projecting lower U.S. mortgage rates for the rest of the year and raising our refinance forecast as a result."

Continued strong mortgage activity, coupled with an increased amount of affordability due to near record low rates, may encourage more consumers to purchase homes and strengthen the housing market. An increase in prices and stabilizing inventory would make corporate relocation easier for those employees with underwater home loans.