While the economy at large and market skewer, loan volume origination may ride a wave of refinance applications and low mortgage rates into 2011, according to a forecast by the Mortgage Bankers Association (MBA). Amounting to $1.1 trillion in residential mortgages, or about $100 billion more than previous forecasts, the higher volume and low mortgage rates mark a silver lining for a month of chaos for the market at large.

Lower forecasts for mortgage rates, plus pale projections for economic growth over the year, partly drove MBA’S report, with the caveat that 2012 may see only $931 billion in loan origination – a rock-bottom figure at its lowest level since 1997.

Commenting on the predictions, Jay Brinkmann, MBA’s SVP and chief economist said, “We have lived through a series of unprecedented events over the past month: the debt ceiling crisis, S&P’s downgrade of US [sic] Treasury debt, the ongoing sovereign debt crisis in Europe, a commitment by the Fed to keep rates near zero for the next two years and stock market volatility that has reached levels not seen since the fall of 2008.”

He went on to say that none of the factors show improvement or growth for the slowdown, suggesting that revised estimates for GDP growth show a 1.9-percent decline in economic growth. As a result, he said, unemployment rates will hover above 9 percent over the rest of 2011 and fall just beneath 9 percent over the next year.

Brinkmann said that refinance rates will spike over 2011 to $697 billion, jumping by $100 billion and forcing the former to double up by more than $150 billion to $400 billion.

He added: “While there is substantial uncertainty about how these events will impact consumer and business behavior, we do not believe that the economy is facing the same types of risks as in 2008. Were the US [sic] economy to enter a recession, it would likely be the result of an external shock, and would be shallow and relatively brief. On the other hand, given that both fiscal and monetary policymakers’ options are limited at this point, it would be difficult for policy changes to soften any blow.”