WASHINGTON – The Mortgage Bankers Association on May 19 released its monthly update of its Mortgage Finance Forecast for May and is projecting $2.4 trillion in mortgage originations in 2004, down from last month's estimate of $2.6 trillion. The MBA also said rising interest rates will cut into refinancings this year, but home purchases will remain strong. With strong employment growth in March and April, coupled with rising inflation pressures and solid production growth, MBA Senior Vice President and Chief Economist Doug Duncan said the Federal Reserve is likely to begin to raise interest rates in June. The MBA projects that the 10-year Treasury rate will increase from 4.0% in the first quarter 2004 to 4.9% in the fourth quarter, averaging 4.5% for the year. Mortgage rates will increase correspondingly with the average 30-year fixed mortgage rate increasing to 6.4% in the fourth quarter, from 5.6% in the first quarter 2004. Despite the higher expected interest rates, the MBA is still predicting a record number of new-home sales and only a slight decline in existing-home sales. The MBA also expects that the decline in refinance originations will be faster than expected because of a more rapid increase in interest rates than previously forecasted. Refinancings will total $1.0 trillion, down from the previously estimated $1.2 trillion. Mortgages for purchasing homes will comprise 57% of total originations, says the MBA.