Wondering where the mortgage market is heading in 2011?
Well, residential mortgage lenders are expected to fund $1.6 trillion in home loans during 2011, thanks in part to the record low mortgage rates, according to MortgageStats.com.
That’s up from an estimated $1.4 trillion by the end of 2010 (at best), which represents a 37 percent decline from the $1.9 trillion seen in 2009.
Still, 2010 has been a good year, thanks mainly to elevated refinance volume tied to those low rates.
During the first quarter of 2010, mortgage bankers originated $328 billion in loans, followed by $450 billion in the second quarter.
Next year, roughly $800 billion will be in prime production, with another $430 billion in FHA loans and VA loans, and $60 billion in interest-only home loans.
Only $1 billion each is expected for subprime and Alt-A loans, while pay option arm lending is slated to remain at $0 for the second year running.
Option arms peaked at a staggering $348 billion in lending volume in 2006, before dropping to just $1 billion in 2009, post-mortgage crisis.
Overall, loan origination volume is predicted to stagnate until employment and wages increase, and unemployment falls. When that will actually happen is still a big question mark.
Note that each loan category isn’t necessarily exclusive, as the interest only category can include jumbo loans, and subprime lending has apparently been replaced by hard money lending.
2011 Residential Mortgage Lending Volume