\"State of the Real Estate Finance Industry\" report released
By MortgageDaily.com staff
1/23/2003

The Mortgage Bankers Association of America (MBA) released its "State of the Real Estate Finance Industry" report, which recaps all-things housing from 2002 and states expectations for this year.

Housing has been a pillar for the snail-like economy, and this will continue as the economy recovers in 2003, the MBA stated in the smorgasbord of real estate and mortgage information.

Mortgage interest rates have been at 40-year lows, and helped fuel the final production figure for of residential loans last year -- $2.46 trillion.

Home purchases and refinancing activity are currently at record levels. More than half of refis in 2002 included some sort of cash-out, sending between $60 billion and $75 billion in additional consumer spending into the economy, the MBA reported.

While the 30-year rate is expected to increase, it should remain low overall and average 6.5% for 2003, the MBA forecasted. Refi activity will slow later in the year because of this, which is expected to reach $763 billion, or 43% of total originations. That's almost half the percentage of total originations during 2002.

The MBA ventured that purchase mortgage originations in 2003 will see the second-best level on record, hovering right around $1 trillion.

The report also made mention of the surge in mortgage-industry jobs. Since 2001, those jobs have increased by 37%, or more than 110,000 more jobs.

On a commercial note, the MBA surveyed commercial loan originations and found activity virtually flat during the first three quarters of 2002. Despite this, low interest rates, the passage of terrorism insurance, and a flight to real estate from the scary equity markets helped keep lending volume up.

Commercial lending would not have fared as well, however, without the strength of retail, industrial, and healthcare property-lending propping up the sector during the first three quarters of 2002 -- office lending was down 17%, and hotel and motel lending was down 44%.

Multifamily lending was down almost 5%, which partially reflects lower multifamily purchases by Fannie Mae and Freddie Mac, the MBA said. However, Federal Housing Administration multifamily-lending increased by almost one-third since 2001.

Commercial mortgage-backed securities conduits provided about a third of the commercial funds advanced, which is up by a quarter from 2001.

The report said that significant progress is being made in the development of electronic mortgages. Continued investment in and development of this effort will pass savings to consumers and investors, especially since the initial standards for electronic residential mortgages were released Jan. 9. The report also mentioned that total Web-based delivery of residential mortgage loans is becoming more of a reality.

It also gave an "economy at a glance," which stated that the entire real estate industry will continue to be a critical crutch for the economy in 2003 as other sectors begin catching up.

This report is different from the MBA's mortgage finance forecast issued earlier this month, which predicts what originations and mortgage rates will do on a quarterly basis. The mortgage finance forecast is issued monthly.

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