The stock market has slumped and foreign economies are crumbling, but the U.S. mortgage industry's drive for a record-breaking year is picking up speed.

The Mortgage Bankers Association, which has forecast a record $1.3 trillion in home loans, may set its target even higher if interest rates continue to drop, said David Lereah, the trade group's chief economist. The previous watermark was set in 1993, when the industry originated $1.0 trillion.

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