2005 housing and mortgage markets: a personal perspective.

Author:Mozilo, Angelo R.
Position:Executive Suite

As 2004 DRAWS TO A CLOSE, THERE is every indication that once again robust housing and mortgage markets made very significant contributions to the nation's economic well-being. And, as a group, residential real estate, home building and mortgage professionals who were prepared for the transition to a more balanced purchase-refinance market prospered.

A quick look at the estimates for year-end 2004 from the major trade associations illustrates my point. The September 2004 Mortgage Bankers Association's (MBA's) mortgage finance forecast estimated that the volume for home-purchase financing would reach $1.522 trillion this year, a record for origination volume.

The robust housing market of 2004 is further supported by other groups. In October, the National Association of Home Builders' (NAHB's) monthly housing and interest rate forecast indicated that 2004 will be a record year for housing starts and sales of new single-family homes. Existing single-family home sales for the year paint an equally strong picture, as the National Association of Realtors (NAR) forecasts that nearly 6.49 million homes will have been sold in 2004.

Of course, the $64,000 question is, "What is in store for 2005?" From my perspective, the answer is another very strong year. I base this statement on both my personal experience from a mortgage banking career that spans 50-plus years and from opinions of Countrywide's chief economist, Jeff Speakes, Ph.D.

There are strong indications that 2005 could well be the second-best year on record for the housing market. A reduction of just 5 percent of the single-family home sale highs of 2004 would enable the market to reach that second-best-year level. In the Oct. 6 issue of NAHB's Eye on the Economy, the builders' trade group concurred, forecasting a 5 percent reduction in 2005 from 2004 levels.

I am very optimistic about 2005. The overall economic indicators combined with innovations in the mortgage industry demonstrate, to my mind, sustainable long-term success for lenders, home builders and real estate firms. And, ultimately, that means success for consumers who want to pursue the dream of homeownership, too.


Briefly looking at economics, I see the Federal Reserve Board continuing to slowly raise rates. The financial marketplace is well-prepared for incremental increases, and there has been less impact on mortgage rates than feared in September. The Federal Open Market Committee (FOMC) raised the...

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