Interest rates will fall next year, sparking a refinancing wave that will push mortgage originations past $765 billion in 1998, and to nearly $800 billion in 1999, according to an economic forecast from Fannie Mae.

The dip in rates, after a possible bump up later this year, should cushion the mortgage industry during the economy's inevitable slowdown, according to Fannie Mae's chief economist, David W. Berson.

This year will be a positive one for lenders as well, Mr. Berson said in a midyear assessment released last week. "The strong pace of home sales in 1997, even if slowing, should bring near-record" originations of initial mortgages.

But because of a falloff in refinancings during 1997, overall volume will likely be around $728 billion, off from $785.3 billion in 1996, Mr. Berson said. The Fannie Mae economist's upbeat tone was echoed separately by the top forecaster at Freddie Mac.

As the chief buyers of the nation's conventional mortgage loans, Fannie Mae and Freddie Mac keep themselves closely attuned to information and trends in the home lending market.

All things considered, "it's a good time to be a lender," said Freddie Mac chief economist Robert Van Order.

Home prices are rising nationwide, and unemployment and inflation figures remain low-both key components of a positive lending market, Mr. Van Order said. "Purchases are growing, and existing homeowners are building up equity."

"We'll see fewer homes having big price drops," Mr. Van Order predicted. Such price declines in the early 1990s had led in some areas to severely depressed property values.

The economists' outlook was good news to lenders who recently were told that home loans 30 to 59 days past due had risen for a second quarter in a row, to 3.11% at March 31. That estimate, by the Mortgage Bankers Association of America, was troubling because shorter-term delinquencies can foreshadow broader credit troubles.

But Mr. Berson said he remains an optimist. The economy "has been robust" for a few years, he said, so that a modest slowdown is both natural and healthy.

Indeed, though a slight dampening of national growth should be evident by fall and extend into 1998, Mr. Berson said, year-to-year mortgage volume "should remain reasonably strong."

To be sure, the mortgage industry is not expecting anything close to a repeat of 1993, when volume hit $1 trillion. Many economists, moreover, think the Fed may raise interest rates further this year.

But Mr. Berson said the central bank, after perhaps increasing rates, would likely reduce them as the economy cools. And that could propel refinancings, as consumers rush to take advantage of lower borrowing costs. As a result, he predicted, refinancings would make up in 1998 for an expected drop in initial mortgage loans.

And while adjustable-rate mortgage volume has been creeping up, to about 28% of overall originations, that trend will reverse, with ARMs' share dropping to about 24% in 1998, Mr. Berson said.

He also said he expects overall mortgage debt to grow by 6.8% this year, to $4.2 trillion, and by another 6.3% in 1998, to $4.4 trillion.

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