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Mortgage rates may be as low as they will get and are on course to rise, slowly moving toward 5% by the end of next year, according to the Mortgage Bankers Association’s latest economic forecast. The group predicts rates on the 30-year fixed-rate mortgage will average 4.4% in the fourth quarter of 2010, increasing to a 4.7% average in the first quarter of 2011 and climbing to 5.1% by the end of next year. Jay Brinkmann, chief economist of the MBA, said he expects a pickup in purchase originations next year. Refinance business, however, is expected to drop next year as mortgage rates begin their rise from record lows. Total mortgage volume is expected to be nearly $1 trillion in 2011, down from an anticipated $1.4 trillion this year and nearly $2 trillion in 2009. The industry is expected to originate an annual $480 billion in purchase mortgages by the end of this year and $626 billion next year; it’s expected to originate $921 billion in refinance mortgages by the end of this year, which will shrink to $370 billion next year. (www.marketwatch.com)
MarketWatch (10/26/10); Amy