Lowering Mortgage Market Expectations

By Douglas A. McIntyre Updated Apr 28, 12:48AM EDT · Published Jun 22, 1:42PM EDT

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Burning House Image There is a study from the Mortgage Bankers Association showing that the outlook for the mortgage market in 2009 is going to be weaker than it previously expected. Not by a bit, either. The MBA took the 2009 outlook down to $2.09 trillion in mortgage originations for all of 2009.

This number may sound rather large, but it is not. This represents a drop of more than $700 billion from an outlook offered in March. In March, it thought there would be a gain of $800 billion.

What is an obvious skewing of the figures here is the rise in interest rates were have seen. Simultaneously, we have seen a drop in immediate demand and home prices keep falling. A half-million mortgages yields lower total dollars if the average home sales price keeps falling.

We have also had a foreclosure resumption following a moritorium. The Fannie/Freddie Home Affordable Refinance Program appears as though it was being too optimistic in March. Rates have risen, and demand has not stayed consistently strong. We have also heard about drop-offs in refinancing applications, but that is typical after a near 100 basis-point rise in rates.

This may be a shock on the surface, but by now it is becoming the norm.

Jon C. Ogg
June 22, 2009

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.