The Mortgage Bankers Association predicts higher-than-expected origination volumes in the second half of the year, even as the trade group lowers its U.S. economic forecast.
The MBA believes the loan origination volume could reach as high as $606 billion in the second half, up from its initial estimate of $527 billion, but down from the $976 billion in estimated originations for the first half of 2013. The rise in the forecast is attributed to the carryover of refinance loans originated in the second quarter and an expected rise in purchase loan originations. The trade group predicts $312 billion in purchase loan originations in the final six months of 2013, up from its original forecast of $299 billion.
"As we said at the beginning of the year, the big unknown for origination volumes was the timing of the market reaction to any statements from Federal Reserve officials regarding the phasing out of quantitative easing and the impact on refinance volumes," said Jay Brinkmann, MBA’s chief economist.
"While the magnitude of the rate increase was larger than we had forecast, the timing of the increase and the impact on refinance volumes was pretty much in line with what we had expected," said Brinkmann.
Meanwhile, the MBA believes economic growth will average 2.2% in the second half of the year from its original forecast of 2.4%, due to reduced fixed-residential investment and reduced government expenditures.
The trade group believes the unemployment rate will sit at 7.5% in the third quarter, before falling to 7.3% in the fourth quarter. Still, concerns linger about inflationary pressures as oil prices and housing costs edge up.
"We saw a sharp pickup in residential housing investment in the second quarter, higher than what we were expecting," Brinkmann explained.
"As a result, we expect that housing investment will continue at current levels but will not be the driver of growth that we had expected in the second half of the year," he added.
Ultimately, several outliers could jump in, stifling U.S. economic growth: the financial situation in Europe, the political situation in the Middle East and developments in China, Brinkmann pointed out.