iEmergent, a Des Moines, Iowa-based market research firm, has issued a first-quarter update to its formal 2010-2014 Mortgage Volume Forecast that was originally released in November 2009. This update provides lending details regarding expected loan volumes and market behavior at the national, state, county and local community levels.
The updated forecasts indicate that home financing opportunities, which many experts hoped had reached their lowest in 2009, will remain ‘mired in a sluggish trough’ this year.
The company forecasts a total purchase volume of 2.99 million loans ($556.9 billion); refinance volumes ranging between 2.77 million loans ($531.1 billion) and 3.35 million loans ($643 billion); and total mortgage volumes ranging between 5.76 million loans ($1.09 trillion) and 6.34 million loans ($1.2 trillion).
These volume forecasts represent an estimated 4.8% decrease in purchase volume from 2009, and a 52% decrease or more in refinance activity, resulting in a purchase-to-refinance split of approximately 49%/51%, iEmergent says.
The firm calls the pool of 2010 potential home buyers "severely constrained." Despite the formation of 1 million new households in 2009, more than one-third of all U.S. households are no longer in the home buyer pool, which has shrunk to levels lower than those experienced in the early 1990s, the company says.
"Lenders can expect to see spurts of increased mortgage activity as individual households act on low rates, stimulus efforts and/or their personal situations, but elevated volumes will be unsustainable and will diminish over time as the remaining household pools shrink faster than they can be replenished," adds Dennis Hedlund, president of iEmergent. "Consumers are saving more, wary of banks, and worried about jobs and earnings stability."