Mortgage Bankers Forecast Rosy Future

WASHINGTON, DC-During a conference call yesterday, the Mortgage Bankers Association reviewed the newly released update to its macroeconomic and real estate finance forecast for the years 2004 through 2006. As indicated by the report, MBA has concluded that sound and consistent economic growth is on the horizon and can be expected to continue through 2006. GDP growth will average about 4.6% this year, and 3.9% and 3.8% in 2005 and 2006, respectively. The good numbers indicate that the housing market will have its good days, too.

MBA chief economist and senior vice president Dough Duncan headed up the conference call and noted that despite the anticipated growth, low inflation will keep increases in interest rates to a minimum. “With inflation under control in the presence of a growing economy, the 30-year mortgage rate will rise to slightly more than 7% by the end of the three-year forecast period,” Duncan noted. “From a historical perspective, these are very modest interest rate increases for the level of economic growth we are expecting, and should cause few adjustment problems for the housing industry.”