MBA: Refi Boom Ending

The Mortgage Bankers Association came out with their numbers for 2009 along with a forecast of future loan production for 2010 and 2011.  Here is their forecast distilled in a chart:

The MBA tracks refinances and purchase loans.  It does not track real estate transaction associated with cash purchase or other alternative financing.  What this chart is telling us is that purchase loans will build on the volume of 2009 but refinances will be in decline.  What is not included in this chart but in the MBA report is that interest rates are projected to climb steadily to 6.2% by the end of 2011.  Interestingly, the MBA appears to only be allowing for a .3% distortion created by the Fed purchase of Fannie and Freddie debt.  Other studies have shown the distortion may be as much as a full percentage point.  If the rate goes higher than 6.2% then refinance figures will be lower than projected here.  Let's watch and see.