This is a partial transcript from Your World with Neil Cavuto, July 18, 2003, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.
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BRENDA BUTTNER, GUEST HOST: Next time you lock your front door, you might want to think about locking in a good mortgage rate. The Mortgage Bankers Association of America (search) says home mortgages are expected to plunge in 2004. So is this your last chance to get that dream rate?
Let's ask Doug Duncan, chief economist and senior vice president of the Mortgage Bankers Association of America. He joins us from Washington.
Mr. Duncan, thanks for joining us.
DOUG DUNCAN, MORTGAGE BANKERS ASSOCIATION OF AMERICA: Thanks for having me, Brenda.
BUTTNER: Well, you expect home mortgages to really plummet? Not the rates, but the actual mortgages to plummet next year?
DUNCAN: Yes, the dollar volumes we expect to drop from about $3.4 trillion, the all-time high, down to about $1.94 trillion, but that would be the third highest on record.
BUTTNER: And is that because rates are going up? You're expecting like a 6-percent rate next year for a 30-year fixed?
DUNCAN: That's right. The indicators are that mortgage rates are going to be moving up modestly, but it won't take a terribly large, upward movement to reduce the opportunity for folks who haven't refinanced.
BUTTNER: Does that mean refinance now?
DUNCAN: Well, if you wanted to get the low rate at your cocktail party, you probably already missed that. That was about the second week of June. There's...
DUNCAN: We're still at rates that are lower than they've been for 40 years. So it's still not a bad time by any means, and housing overall is still going to be one of the leaders over the economy. It's just that the opportunity is starting to wane.
BUTTNER: Right. I think last year, what, the 30-year fixed was 6.49. So we're still...
BUTTNER: Even next year, we'll be below what it was, but they're nowhere near the bargain-basement prices that we had just a few weeks ago.
DUNCAN: That's right. People have recognized the opportunity, and this has been far and away the biggest wave of people entering the market in the history of the country.
BUTTNER: This, of course, has been driving our economy. Any concern that this kind of pullback could really kind of throw that recovery off track?
DUNCAN: Well, of course, the reason that the rates are rising is because everyone expects the economy to recover.
When the economy recovers, that means job creation will happen, hours worked will extend. So people are going to be making additional resources or income from other areas to substitute for some of the cash-out refinancing.
In addition, we still expect the purchase activity to be stronger each of the three next consecutive years.
BUTTNER: All right. So bottom line is get in there now.
DUNCAN: For refinancing, that's right.
BUTTNER: All right. Thank you so much. We appreciate your insights.
DUNCAN: Thanks for having me.
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