Where are originations headed this year?
It's not an easy question to answer, because most lenders are unwilling to express an opinion right now - on or off the record. Apparently, they are afraid to look foolish if things don't work out the way they expect.
One prominent executive at a bank-owned mortgage company said he was unwilling to make a prediction on earnings until his bank's economist has made a firm interest rate forecast.
It may well be that few executives have a positive story to tell. Originations appear to have fallen by about 40% industrywide in the first half this year from 1994 levels. But fundings weakened significantly in the second half of 1994, finishing at about $300 billion. That provides a soft basis of comparison for this year's second-half volume.
A pessimistic report last week from TRW Redi Property Data, Anaheim, Calif., said originations should be down about 34% for 1995.
Last month, Donna Callejon, Fannie Mae's senior vice president for single-family marketing, said at a San Francisco conference that 1995 originations should reach $400 billion in the second half - about 10% behind last year, but better than Fannie's spring forecast, which put the number at about minus 20%. She also said 30-year loans appear to be dominating the market, pushing aside the 15-year loans that had become popular during the big refi boom of 1993.
Though short-term rates have dropped further since Ms. Callejon made her forecast, she is sticking with the $400 billion figure.
That provides a pretty broad range of possibilities. Go with TRW Redi's percentage decline and you come up with 1995 originations of about $500 billion. Go with Fannie's Donna Callejon and you have something approaching $700 billion.
If you want to make your own choice, here are some additional clues:
*Originations by thrifts fell about 40% in the first half and have nearly stopped dead since because adjustable rates are about the same these days as fixed rates.
*FHA and VA loans dropped by two-thirds in the first half; and mortgage insurance issuance fell about 40% in the first half.
In the TRW projections, volume of home equity loans was expected to drop in the second half because home prices have not risen sufficiently to make more equity available to homeowners.
Last week was a quiet one for the mortgage market, according to HSH Associates, Butler, N.J. Rates were virtually unchanged.
The national average for 30-year fixed-rate loans fell by two basis points, to 8.02. Fifteen-year loans also dropped by two points, to 7.53%. One-year adjustables rose by a point, to 5.91%
Bargain rates were being offered by only a handful of lenders, and the number was little changed in the week.