Will 2013 Bring Declining Originations and Rising Interest Rates?

As we delve into the new year, many wonder what lies ahead in the mortgage industry. According to one mortgage lender, we can expect declining originations, rising interest rates, and fewer mortgage professionals.

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Residential mortgage origination volume will decline 24 percent this year, largely driven by significant declines in refinances, according to Milford, Connecticut-based ""Total Mortgage Services, LLC."":http://www.totalmortgage.com/index2.asp?utm_expid=640214016&utm_referrer=http%3A%2F%2Fwww.totalmortgage.com%2Findex2.asp

The mortgage lending company foresees purchase originations rising by about 16 percent this year. However, a sharp decline in refinance originations will more than offset this growth, according to the company's analysts.

In addition, interest rates that continue to hover near record lows will soon become a thing of the past, according [COLUMN_BREAK]

to Total Mortgage Services. The company anticipates rates will begin rising by the second half of 2013.

The lender expects strengthening in the overall economy will contribute to higher interest rates. ""Rising employment and wages, while supporting the residential real estate market, will also help to push interest rates higher and cut refinance volume significantly,"" the company states.

Changes in the mortgage market landscape this year ""will present mortgage lenders with a new set of challenges,"" said John Walsh, president of Total Mortgage Services.

""This new set of challenges will require adaptation by lenders that wish to survive in the new lending environment,"" he added.

As refinances decline and purchases rise, originators will have to adapt. Total Mortgage Services suggests the ""vast majority of mortgage originators are wholly unprepared"" for this change.

However, not all originators will adapt, according to the company, and not all will need to. The company anticipates a 30 to 35 percent decline in employment in the originations sector this year.

While a decline may be warranted this year, ""the most likely victims of the industry's reduction in force [will be] younger, less experienced workers.""

This trend will lead to a whole new obstacle for the industry: ""the graying of the mortgage industry,"" Total Mortgage Services says.