Most housing professionals and trade organizations doubt there will be a significant double-dip recession. For example, the Mortgage Bankers Association’s Economic and Mortgage Finance Forecasts, released recently, projects $1.1 trillion in residential mortgage origination volume in 2011, roughly $100 billion more than earlier forecasts, as low mortgage rates have brought in higher than expected refinance volume, while home purchase volume has been less than anticipated.
However, despite lower forecasted mortgage rates, weaker projected economic growth in 2012 led to a reduction in MBA’s origination forecast for that year to $931 billion, which would be the lowest volume originated since 1997.
Jay Brinkmann, MBA’s senior vice president and chief economist said, “We have lived through a series of unprecedented events over the past month: the debt ceiling crisis, S&P’s downgrade of US Treasury debt, the ongoing sovereign debt crisis in Europe, a commitment by the Fed to keep rates near zero for the next two years and stock market volatility that has reached levels not seen since the fall of 2008.
“While there is substantial uncertainty about how these events will impact consumer and business behavior, we do not believe that the economy is facing the same types of risks as in 2008. Were the US economy to enter a recession, it would likely be the result of an external shock, and would be shallow and relatively brief.”