Home mortgage lending will likely fall 25% next year to its lowest level since the late 1990s as the economic slump keeps demand low and banks begin running out of qualified borrowers to refinance, the Mortgage Bankers Association forecast Tuesday. The trade group predicted that home loan originations will fall to $900 billion in 2012 from an estimated $1.2 trillion in 2011 and nearly $1.6 trillion in 2010.
The forecast comes even as 30-year fixed-rate mortgages are expected to hold near historic lows.
The rate is seen at 4.5% next year, about half a percentage point above current levels.
"Continued slow economic growth will mean that unemployment will remain elevated through 2012, which could slow the improvement in delinquency and foreclosure volumes, meaning that in addition to lower production volumes for the industry, mortgage servicers are also likely to be under pressure," the MBA said at its annual convention in Chicago.
