The Mortgage Bankers Association has already cut its forecast for mortgage lending this year because of declining loan applications and rising interest rates.

The MBA now says residential mortgage originations will fall 34%, to $1.12 trillion, down from the 32% drop it predicted in October, when it estimated that originations would total $1.2 trillion.

Mike Fratantoni, the trade group's chief economist, said the combination of rising rates and new regulations, specifically the qualified mortgage rule that went into effect Jan. 10, have already put a damper on home purchases. Still, November to January tend to be the slowest months for mortgage applications.

Purchase originations now are expected to rise just 3.8% this year to $677 billion, compared with $652 billion in 2013. The MBA previously had forecast a 9% jump in home purchases to $723 billion.

Refinances are expected to drop a whopping 60%, to $440 billion, compared with $1.1 trillion in 2013. The trade group had previously expected a 57% drop in refinancings, to $463 billion.

The MBA left its 2015 forecast unchanged at roughly $1.2 trillion with refinances dropping to $433 billion and home purchases rising to $796 billion.

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