“We have not yet seen fully the impact of the credit shock…”

From Reuters:

2008 mortgage originations to hit 8-year low: MBA

Mortgage originations will fall next year to the lowest levels since 2000, forcing job losses for at least 30,000 more home finance professionals, according to a forecast released on Wednesday by the Mortgage Bankers Association.

Inventories of homes for sale will remain high as tighter lending standards across the industry reduce available credit for prospective home-buyers, said Doug Duncan, the MBA’s chief economist. Foreclosures as a result of increasing payments on adjustable-rate loans or poor underwriting will exacerbate the problem, he said.

“We have not yet seen fully the impact of the credit shock to the U.S. and world economies, and the severity of that impact will depend on how long it takes for the markets to return to normal functioning,” Duncan said at the annual meeting of the Mortgage Bankers Association.

Total mortgage originations will likely decline 18 percent to $1.89 trillion, the lowest volume of purchase and refinance loans since $1.14 trillion in 2000, according to the forecast. Loan volume will slide another 6 percent in 2009, it said.

Reduced volume means less business for mortgage bankers, who have already seen their ranks thinned by 60,000 to 70,000 people in the housing downturn, Duncan said.

It’s “tough times,” he said. “Continued consolidation is to be expected in the industry.”

Housing will be a drag on U.S. gross domestic product through the second quarter of 2008, Duncan said.

From the AP:

Mortgage Originations Expected to Plunge

The nation’s more than $2 trillion home mortgage business won’t halt its current slide anytime soon, with mortgage originations expected to fall 18 percent next year and decline another 6 percent in 2009, the Mortgage Bankers Association predicts.

And although a forecast to be released Wednesday at the organization’s annual convention offers no hope that a housing turnaround is near, the industry still foresees a future for the subprime market that helped trigger the broader downturn, the MBA’s chief economist said.

“It will come back,” Doug Duncan said in an interview in which he described a shift to far stricter lending standards for people with spotty credit.

The gloomy mortgage outlook is driven by the shrinking flow of cash to lenders from increasingly risk-averse investors, as well as slower overall economic growth.

“We have not yet seen fully the impact of the credit shock to the U.S. and world economies, and the severity of that impact will depend on how long it takes for the markets to return to normal functioning and where credit spreads ultimately settle,” Duncan told reporters in a preview of his Wednesday convention speech.
…
The MBA forecasts a 2 percent home price decline both this year and next year, with prices flattening out in 2009.

With the current glut of homes for sale, “any significant increase in homebuilding is probably years off,” Duncan said.
…
Duncan said the subprime niche won’t dry up entirely. But he said subprime borrowers will have to make sizable down payments before securing a mortgage loan and must offer documentation of their incomes, employment histories and credit standing.

“The day of the 100 percent loan-to-home value loan in the subprime world are gone,” he said in an interview with The Associated Press.