US RESIDENTIAL MORTGAGE ORIGINATIONS Q3 2009

Residential mortgage originations dropped 17.7% in the third quarter of 2009, according to estimates provided by Mortgage Bankers Association (MBA).

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In particular, total residential mortgage originations for 1- to 4-family structures in Q3 2009 totalled $515 billion down from $626 billion in Q2 2009. However, it should be noted that mortgage originations for purchases actually increased 10.5% (from $200 billion in Q2 2009 to $221 billion in Q3 2009), while mortgage originations for refinancing dropped 31.2% (from $426 billion in Q2 2009 to $293 billion in Q3 2009).

MBA predicts that residential mortgage originations will decrease further in the fourth quarter of 2009. In particular, mortgage originations for home purchases are expected to drop 21.7% to $173 billion, while mortgage originations for refinance are predicted to drop 18.4% to $239 billion.

With this prediction, residential mortgage originations for 1- to 4-family structures are predicted to total $1,963 billion in 2009, representing a 30.1% increase compared to 2008. This increase will be entirely due to a 60.2% increase in mortgage originations for refinancing, which are expected to total $1,245 billion in 2009 compared to $777 billion in 2008.

Mortgages for purchases will actually post a decline of 1.8% ( from $731 billion in 2008 to $718 billion in 2009). However, MBA predicts that residential mortgage originations for purchase will increase 11.8% in 2010 and 11.3% in 2011.

On the contrary, mortgage originations for refinancing are predicted to post sharp declines of 39.4% and 21.9% in 2010 and 2011, respectively.

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