MBA: Interest-Rate Activity Promises Repeat of '04

WASHINGTON, DC-The future looks bright for the real estate finance industry, or so says the Mortgage Bankers Association. The organization’s annual summary and forecast for the industry, released yesterday, concludes that substantial economic growth will buoy financing this year and through 2007.

“2005 will be a very good year for commercial real estate,” MBA chief economist Doug Duncan said during the lunch briefing; Duncan is also the organization’s senior vice president for research and business development. In a written release, he supports the theory, noting that the gross domestic product’s estimated annual growth rate of 3.5% will lead to, among other positive outcomes and increased employment.

“There will likely be a slight uptick in the inflation rate in 2005, which will support the Federal Reserve’s continued march upward with the Fed funds targeted as the Fed maintains focus on its No. 1 objective of keeping inflation at bay,” Duncan explained. “Long-term rates will therefore remain quite low and thus supportive of real estate finance activity, whether residential or commercial.” And the aforementioned factors are expected to produce the same favorable results in 2006 and 2007.