It is unlikely that home purchase mortgage origination volume will top $530 billion this year, as the negatives in the economy far outweigh the positives, the market research firm iEmergent said.
The company is basing its latest forecast of $528 billion (a cut of over 5% from its previous projections) in purchase loans on increasingly wary customers, the shift forward in purchase patterns caused by the tax credit, a projected rise in interest rates by the end of the year, falling home prices and a slight decrease in average loan size.
In the first quarter, iEmergent projected $557 billion in purchase volume for 2010. It has also cut its refinance forecast by 5% from between $531 billion and $643 billion to a range of $504 billion to $610 billion. This brings the total volume projection to between $1.03 trillion to $1.14 trillion.
"There are not enough positives to fuel a big upswing in the housing market, because the demand side — U.S. households and homeowners — remain stuck in big negatives," Dennis Hedlund, iEmergent's president, said in a press release Tuesday. Those negatives include "job anxieties, extended under- and unemployment, the existence of too much debt, no savings, tougher credit [and] foreclosures."