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MBA Revises Economic Forecast Down, Originations Up

The ""Mortgage Bankers Association"":http://mbaa.org/default.htm (MBA) revised its economic forecast down and its mortgage originations and mortgage rate forecasts up in its most recent outlook released Thursday.

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""Overall economic growth will be slower than originally forecast and we were not forecasting particularly robust growth to begin with,"" said Jay Brinkmann, MBA's chief economist.

Having previously announced a 2.4 percent economic growth forecast for the second half of this year, MBA now believes economic growth will be closer to 2.2 percent.

Inflation ""will be sharply higher,"" according to the industry group, as a result of rising oil and housing rental prices.

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Brinkmann expects consumer spending to be ""somewhat higher"" in coming months.

However, residential real estate investment, while likely to continue its current pace ""will not be the driver of growth that we had expected in the second half of the year,"" Brinkmann said.

The economy remains vulnerable to uncertain political and economic circumstances in Europe, the Middle East, and China, according to the MBA.

Having previously forecast about $527 billion in originations in the second half of this year, MBA now anticipates about $606 billion in originations.

""As we said at the beginning of the year, the big unknown for origination volumes was the timing of the market reaction to any statements from Federal Reserve officials regarding the phasing out of quantitative easing and the impact on refinance volumes,"" Brinkmann said.

He admitted ""the magnitude of the rate increase was larger than we had forecast,"" but added, ""the timing of the increase and the impact on refinance volumes was pretty much in line with what we had expected.""

Of the expected $606 billion in originations in the second half of this year, about $312 billion will be purchase originations, according to MBA.

MBA anticipates climbing mortgage rates to reach 4.7 percent in the fourth quarter of this year, which is between 20 and 30 basis points higher than the group was anticipating earlier this year.

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.
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