Those were some of the comments from the MBA's chief economist, Douglas Duncan, at a press briefing Tuesday in advance of an economic outlook presentation that is scheduled for today at the Washington, DC-based MBA's 90th annual convention and expo at the San Diego Convention Center. The briefing by Duncan was one of a host of presentations, panels and events at the banking group's annual meeting, where the MBA this week also has elected a new chairman, officers and directors, and has adopted a number of policy measures.

"It's our belief that the recovery is under way," Duncan told a group of reporters at the briefing. He noted the MBA is "not in the camp" that believes US consumer debt is in danger of causing a recession, instead saying that the MBA foresees 6% growth in gross domestic product for the third quarter of this year, 4% growth in the fourth quarter, and about 4.2% for the full year 2004.

Duncan, while he oriented much of his presentation toward the residential markets, told GlobeSt.com that the same factors driving the housing side of the mortgage business will obviously come into play in commercial markets. Some of those impacts will likely be milder in the commercial sector, however, Duncan said in response to questions from GlobeSt.com. For example, while the MBA expects that home mortgage originations will drop by 50% in 2004 (from an estimated $3.3 trillion in 2003 to $1.6 trillion in 2004) as a result of an eventual rise in interest rates, he says the rising rates will have an impact on commercial originations, but the percentage of decline will likely be smaller.

Rising interest rates will likely aid the cause of apartment investors, Duncan said, because higher rates will prevent some would-be home buyers from leaving apartments to become homeowners. Basically, he added, this will be the reverse of the low-interest environment that has pushed apartment vacancies higher in some markets as renters have made the transition to home ownership. Duncan also foresees a consolidation in the home mortgage industry, a trend that he said has already begun. The mortgage industry has been one of the few users of office space to expand during the recession, but Duncan said that the pending consolidation in the industry is not likely to reduce overall demand for office space nationwide because an improving economy will boost demand for office space from companies in other industries.

Earlier in this week's conference, the MBA elected Robert M. Couch, president and CEO of New South Federal Savings Bank in Birmingham, AL, as its new chairman. Michael F. Petrie, president of P/R Mortgage and Investment Corp. in Carmel,IN as chairman-elect and Regina M. Lowrie, president and CEO of Gateway Funding Diversified Mortgage Services in Fort Washington, PA as vice chair. The MBA's newly elected directors include Clifford B. Hardy, president and CEO of First Housing in Tampa, FL, who will chair the group's Commercial Real Estate/Multifamily Finance board of governors; and Sterling Edmunds, president and CEO of SunTrust Mortgage Inc. in Richmond, VA, who will chair its Residential board of governors.