Mortgage Bankers Slash 2009 Forecasts

We now hear reports regarding the problem of higher interest rate & eligibility issues which I noted during the last several weeks.
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Existing Home Sales Rise 2.4% in May, Shy of Expectations:

Sales of previously owned homes in the United States rose at a slower-than-expected pace in May, an industry survey showed Tuesday, pointing to a sluggish recovery from the severe economic recession.

The National Association of Realtors said sales rose 2.4 percent to an annual rate of 4.77 million units from a downwardly revised 4.66 million pace in April. The May reading was below market forecasts for a 4.81 million-unit pace.

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Today the Mortgage Bankers Association put out a revision in its 2009 originations forecast. A big revision. A $700 billion revision. “$84 billion of the drop is due to lower purchase originations and the rest is due to lower rate/term refinances and very low volumes in the Fannie Mae and Freddie Mac Home Affordable Refinance Program (HARP).” That’s big too.

The MBA had raised its forecast by over $800 billion in March following the drop in interest rates associated with the Fed’s announcement on the Treasury bond and mortgage-backed securities purchases programs as well as the implementation of the HARP. But at the time it warned that rates might not stay low, and guess what? They didn’t.