Tough for Mortgage Bankers, Great for Borrowers

The Mortgage Bankers Association on Tuesday predicted that 30-year fixed rate mortgages would end the year around 6.90 percent, considered low historically, but high enough to stifle home refinancing and thus overall loan volume.

"From the perspective of the mortgage banker it will be a tougher year," says Doug Duncan, the MBA’s chief economist. "From the perspective of the borrower, it will be a great year because the mortgage banker will be passing through every penny of cost savings they can to the consumer to keep their business."

The MBA says total home loan creation will decrease by 17 percent this year. Lenders will issue about $2.4 trillion in loans in 2006, the fifth highest year on record, but down from $2.9 trillion last year and a substantial reduction from the all-time high of $3.9 trillion in 2003.

Source: Reuters News, Kristin Roberts and Lynn Adler (05/09/2006)