Foreclosures will peak by the end of next year and unemployment will climb above 10 percent as the housing market and U.S. economy grapple with the aftermath of the recession, the Mortgage Bankers Association's chief economist said Tuesday.
Many lenders have issued a moratorium on foreclosures, causing a drop in the number of discounted, bank-owned properties hitting the market this year. But some economists expect that a wave of foreclosed properties could hit the market in 2010, dampening home prices again.
rising unemployment will lead to a growing number of foreclosures at least through the end of next year, Brinkmann said.
"We're forecasting about another 10 percent, roughly, price decline between now and the first quarter next year," he said.
Mortgage rates, meanwhile, will average about 5 percent through the end of this year, then rise to 5.6 percent by the end of 2010. That should help fuel a 12 percent increase in home mortgages next year, but home refinancing will decline as mortgage rates edge higher, he said.
"We're assuming, in a sense, weak or little inflation here," Brinkmann said.