X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON, DC-The Mortgage Bankers Association has released its three-year economic forecast update, predicting strong economic growth of an estimated 3.5% through 2008. The update reiterates conclusions detailed in MBA’s July update, including projections of a solid labor market, despite the negative impact Hurricane Katrina has had on employment in the Gulf region.

MBA attributes much of the anticipated economic growth to the housing market which has been able to assist in the economy’s ability to override drastically increased energy prices and a growing trade deficit. Residential mortgage production will reach $2.78 trillion for 2005, and single-family home sales, as MBA surmises, are expected to reach record highs for the fifth year in a row.

And while economists expect the Federal Reserve to manipulate interest rates to keep inflation under control, MBA predicts that such changes will not produce a negative effect on the mortgage banking industry. “Long-term rates, albeit rising, will remain relatively low, supporting residential and commercial real estate finance activity,” says Doug Duncan, MBA chief economist and senior vice president for research and business development. “Long-term rates have risen by about 40 to 50 basis points from their lows immediately after Hurricane Katrina.” He notes that the 30-year fixed-rate mortgage yield should reach 6.8% by the end of 2007. “Even with this moderate increase from the current level, interest rates will still be quite low by historical standards.”

Carefully researched estimates notwithstanding, MBA concedes that the projected 3.5% economic growth is not a sure thing. Factors such as higher oil prices, higher core inflation or more drastic Federal Reserve action could give yield a lower growth percentage. However, the converse situation could arise, as rebuilding in the Gulf could giver rise to a larger increase in growth than expected.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.