HOME MORTGAGE ORIGINATIONS Q4 2009

US home mortgage originations are predicted to post double-digit drop in Q4 2009, but will be more than 10% up on a year-over-year basis, according to the November 2009 forecast issued by the Mortgage Banker's Association (MBA).

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In particular, the MBA forecast predicts that the non-seasonally-adjusted mortgage origination activity for 1- to 4-family housing will drop to $410 billion in the fourth quarter of 2009, representing a 20.4% drop compared to the estimated $515 billion of activity that took place in the third quarter.

Home mortgage originations for both purchase and refinacing are predicted to post double digit declines and particularly, -22.2% and -18.8%, respectively. Mortgage originations for refinancing are predicted to represent 58% of total 1- to 4-family mortgage originations in Q4 2009.

On a year-over year basis though, the predicted activity for Q4 2009, will be 11.1% higher than the activity for Q4 2008, which is estimated at $369 billion. However, this aggregate statistic masks a predicted 15.3% year-over-year drop in purchase mortgage originations and a predicted 43.4% year-over-year increase in refinancing mortgage originations.

Total home mortgage originations for 2009 are predicted to reach $1,961 billion representing a 30% increase compared to 2008, but this will be exclusively driven by refinancing activity, which is estimated to post a 60.1% increase in 2009, while purchase mortgage volume is estmated to post a drop 1.9%.

For 2010, home mortgage originations are predicted to decrease to $1,493 billion, representing a 23.9% drop from 2008. This drop is expected to be driven by a 44.5% decrease in refinancing mortgage activity and moderated by an increase of 11.9% in purchase mortgage activity.

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