Magazine article Mortgage Banking

Expect 'Significant Declines' in Mortgage Originations

Magazine article Mortgage Banking

Expect 'Significant Declines' in Mortgage Originations

Article excerpt

Mortgage market watchers should forget about any more help from the Federal Reserve in the form of interest-rate cuts even as they should expect "significant declines" in mortgage originations through the rest of this year and beyond, according to MBA's head of research.

Jay Brinkmann, MBA's vice president of research and economics, told attendees at MBA's National Secondary Market Conference & Expo in Boston in May that despite the current credit crunch, the Fed's priority continues to be guarding against inflation, even as the value of the U.S. dollar is a growing concern to monetary policy-makers.

"Are we in a recession?," asked Brinkmann. "If we're not, we can at least see it from here. We're that close."

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Even if the Fed were so inclined, further rate cuts would likely be of marginal value, given that the economic slow- down is due to a credit squeeze.

"We're dealing with a bank run that does not involve banks," said Brinkmann. "Does beggaring investors in order to force them to take on more risk work if investors are one step away from sticking their money into mattresses because they can't assess the risk? …

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