Mortgage Originations Down 44% in Third Quarter of 2008

Preliminary numbers compiled by Inside Mortgage Finance suggest that mortgage originations tumbled by $115 billion or 26 percent between the second and third quarters of this year. That would put 3Q08 mortgage volume down a hefty 44 percent from the same period a year ago. If mortgage originations remain weak in the fourth quarter, a distinct if not likely possibility at this point, total volume for the year will come in at only about $1.5-1.6 trillion or 34 percent below last year's $2.43 trillion level. Currently, the only sectors of the mortgage market that are seeing increased activity are FHA and VA. FHA originations, in particular, are continuing to grow while total volume declines. There are expectations that the federal government, which now controls Fannie Mae and Freddie Mac, will start loosening the two government-sponsored enterprises underwriting requirements and lower their fees in the months ahead. That could provide a badly needed boost to the residential mortgage market.