Industry forecasts remain upbeat

Interest rates may be wavering and the economy uncertain, but the housing industry and lenders continue to be optimistic.

The Mortgage Bankers Assn. of America raised its forecast for 2003 loan volume 31% to a record $2.6 trillion because of low interest rates.

That is above the group’s preliminary estimate of $1.98 trillion, said Phil Colling, an economist with the Washington-based trade group. A record $2.46 trillion was lent in 2002.

“No one would have predicted at the end of last year that mortgage rates would drop as low as they have,” Colling said. “Just before the beginning of the war in Iraq, we saw rates set new records.”

Mortgage rates will probably average 5.8% this year and 6.1% in 2004, compared with 6.6% in 2002, predicts Freddie Mac, the second-largest mortgage buyer after Fannie Mae.

The National Assn of Realtors, meanwhile, boosted its forecast and now expects home sales this year to fall 1.3% to 6.46 million, compared with a month-ago estimate of a 1.5% decline.

Existing home sales will probably fall 0.7% to 5.53 million, and new home sales are forecast to fall 4.7% to 928,000 homes, said David Lereah, chief economist for the association. Last month the trade group forecast a 1.3% drop in existing home sales and a 3.1% in new-home sales.