Highlights of the national forecast indicate that 2011 home financing activity will remain mired in a sluggish trough in 2011, with very slow growth prospects for 2012 through 2015:

-- 2011 Total Purchase Volume: 2.592 million loans for $476.6 billion
-- 2011 Refinance Volume Range: 2.068 million loans for $384.8 billion (low)
2.503 million loans for $465.8 billion (high)
-- 2011 Expected Total Mortgage Volume: 4.660 million loans for $903.8 billion (low)
5.095 million loans for $942.4 billion (high)

The latest volume projections represent an estimated 38% decrease in total originated dollars from estimated 2010 end-of-year volumes, due mainly to lower expected loan sizes and a 34% drop in projected refinance volumes. 2011 purchase dollar volume is now slated to drop by 3.4% from estimated 2010 end-of-year levels even though loan units are expected to be flat. The 2011 purchase/refinance split will be approximately 53%/47%.

The rates at which individual local markets and household segments generate purchase mortgages remain far below historical trends. Forty-one percent (41%) of all U.S. households are now no longer part of the remaining 2011 pool of potential homebuyers who might be eligible, able and willing to purchase or refinance a home. Purchase money mortgage applications, pull through rates and closings have continued to languish through of a lending year that is now half complete. Refinance demand has popped-up for brief periods, but future waves will continue to diminish as the available homeowner household pool shrinks.

“The home finance industry is pinning too much hope on short-term, supply-side headlines that trumpet the wishful thinking of low rates, low prices, high affordability and lots of available inventory. But households are trapped. Middle-class homeowners won’t buy because they can’t sell without big losses. They can’t re-finance because they can’t qualify. Add millions of the unemployed who have limited prospects of finding a job in the near-term, unless it’s part-time or pays less than what they were used to, and you have a formula that bodes poorly for home lending in the next two to three years. A quick turnaround in this environment requires a rapid rebound of demand, not supply,” said Dennis Hedlund, President of iEmergent.