MBA Foresees Less Financing in 2008
- Jan 31, 2008
By Keat Foong, Executive EditorWashington, D.C.—The Mortgage Bankers Association (MBA) forecasts a number of weakening statistics through this year. In a media teleconference recently, Doug Duncan, MBA chief economist and senior vice president, [pictured, right] said median home prices are expected to decline by 12 to 15 percent in real terms between mid-2007 and mid-2009. Duncan said housing production will likely fall through the third quarter and home sales will decline 13 percent in 2008. Inventories are high and may be understated, he added.Duncan, who said he is not projecting a recession this year, predicted the 30-year Treasury rates will continue to decline as has the 10-year Treasury rates. However, spreads will be wider, he said. Kieran Quinn, MBA chairman, [pictured, left] said in the teleconference that capital remains relatively plentiful. However, LTVs allowed by lenders are down, in addition to spreads being wider, he said. In the third quarter, mortgage originations were lower by 4 percent. MBA projects that mortgage originations will decline even more in the fourth quarter, and that the trend will hold through 2008. Quinn said that 90 percent LTVs will be hard to find today, and the norm for LTVs has dropped to 70 percent. “The past few years were certainly a golden age in real estate financing,” Quinn commented. Capital was plentiful, and interest rates were one of the lowest in history, he said. “Seems overnight, on August 15th, it all changed.” Quinn said the MBA is working to educate investors on the underlying real estate. “We want to continue to remind investors that the fundamentals of our business are sound,” he said.