U.S. residential mortgage lending volume will fall below the $1 trillion mark next year, according to the projections from iEmergent, a Des Moines, Iowa-based market research firm. In its forecast, iEmergent projects slow growth between 2012 and 2015.
According to the firm, purchase volume next year will total 2.62 million loans for $490.9 billion, and the range of refinance volume extends from a low of 2.18 million loans (for $412.9 billion) to a high of 2.63 million loans (for $499.8 billion). Total volumes will fall in the range of $903.8 billion to $990.7 billion.
These projections indicate an estimated 17% decrease in total origination volume from end-of-year 2010 total volume estimates, led mostly by a 29% drop in projected refinance volume.
Thirty-eight percent of all U.S. households are no longer part of the 2011 pool of potential home buyers who might be eligible, able and willing to purchase or refinance a home, iEmergent says. The total available-home-buyer pool has been reduced to levels similar to those from 1995.
"The home financing industry is now caught in a serious "demand trap,' a negative feedback loop of economic and behavioral deflation,’ says Dennis Hedlund, president of iEmergent. ‘Similar to the liquidity trap that spawned it, mortgage rates have reached unprecedented low levels, yet purchase money mortgage demand languishes, as prime home buyers are trapped by cumulative downward economic and job pressures.’
SOURCE: iEmergent