Bankers group raises forecast for loans 2.9%

REAL ESTATE WATCH

October 26, 2003|By Bloomberg News

The Mortgage Bankers Association of America, the industry's trade group, last week raised this year's forecast for the number of loans by 2.9 percent to $3.32 trillion as interest rates retreated from a one-year high in recent weeks.

The estimate exceeds the group's outlook last month of $3.23 trillion and would raise the so-called loan volume 34 percent above last year's record $2.48 trillion. Refinancing is expected to account for about 66 percent of all loan originations, matching the previous estimate of the Washington group.

Volatility in mortgage rates, due to conflicting economic signs, is making it difficult to gauge whether housing will continue to bolster the economy, said Michael T. Darda, chief economist with Polyconomics Inc.

Lending fuels consumer spending as new homeowners buy furnishings or appliances and existing homeowners borrow more to pay for renovations or other purchases.

"The rates have been very volatile, but it's clear they are heading up," Darda said. "It's not going to be Armageddon. We're not talking about levels that are going to create a housing disaster."

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