Magazine article Mortgage Banking

An Unusual Outlook. (Portfolio)

Magazine article Mortgage Banking

An Unusual Outlook. (Portfolio)

Article excerpt

THE ECONOMY IS STRUGGLING TO EMERGE FROM THE SHADOW OF A DEPRESSED stock market. Yet, the housing market has not even noticed there was a downturn, much less a problem with corporate accounting. Housing has been the runaway winner in a contest stacking up the best current investment choices: stocks, certificates of deposit or real estate. No contest, right?

But rates have been the key to a powerful year in home sales. Douglas Duncan, chief economist for the Mortgage Bankers Association of America, writes in the cover story that rates have averaged under the initial MBA forecast for 2002. Duncan estimates that mortgage rates will average about 7 percent for all of 2002--"about 25 basis points below our original expectation." With the boost from low rates, Duncan writes, "It now looks as though 2002 will be the second-largest mortgage origination year in history. Total originations appear likely to hit or exceed $1.6 trillion, with $1 trillion of that for home purchases and the rest for refinancing."

Duncan adds that home sales, both new and used, should "tie or exceed the records set last year." For next year, he sees an average 30-year, fixed-rate mortgage carrying a rate approaching 7. …

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