At least one group of industry experts believes that the free-fall in housing prices may soon end. The Mortgage Bankers Association (MBA) is looking for “modest increases in home sales and stabilizing home prices” in the later part of 2011. Mortgage originations, though, will drop from $1.4 trillion this year to $1 trillion in 2011. Specifically, the MBA says that the number of refinancing originations will decline but purchase originations will rise.
The banking group points to the following trends in the economy which will affect the mortgage industry:
- Unemployment rates should begin to fall by the end of 2011
- Fixed mortgage rates may rise to 5.1% by the end of 2011 so buyers who want the best rates may be prompted to close on a property sooner rather than later.
- New home sales should begin a slow recovery in 2011.
- Refinancing will drop from 66% of total mortgage activity in 2010 to 37% in 2011 and the balance of the industry demand will stem from new purchases.
In general, the bankers are looking for well-known indices like Case-Shiller to show ‘stabilization’ in 2011. However, the home prices will be affected by geographic location and value. For example, larger homes may still take longer to sell. If the nation’s GDP rises 2.1% in 2010 as the MBA predicts, optimism could spread in the real estate industry. Key players from real estate agents to bankers will be marketing more first and second homes along with financing options.[Source: Mortgage Rates and Purchases expected to rise in 2011 and 2012. Mortgage Bankers Association. 26 Oct. 2010. Web. 12 Nov. 2010]