The Mortgage Bankers Association cut its forecast of home-mortgage lending this year by 27% amid deflating hopes for a boom in refinancing.

The trade group said Monday that it now expects $2.034 trillion of originations of mortgages for one- to four-family homes in 2009, down from a forecast of $2.780 trillion in March, when falling interest rates spurred expectations for huge volumes of refinancing.

Originations totaled $1.617tr in 2008, down from a peak of $3.812tr in 2003, when a sharp drop in rates led to a record refinancing wave.

In recent weeks, rates for borrowers with strong credit scores on 30-year fixed-rate conventional mortgages have been around 5.25% to 5.5%, up from 50-year lows of less than 5% in most of April and May. Rising rates reduce the number of borrowers who could benefit from refinancing.

Wall Street Journal