Sales forecasting Pendant Corporation is a (disguised) U.S. financial services firm that sells home mortgages to homeowners. The company has focused on growing its regional market share and managing its profitability. You are a consultant to Pendant, and your current assignment is to build a sales forecasting model of the company that is driven by key environmental and policy variables.

The company identifies interest rate variability as the largest source of financial risk but also is concerned about other possible sources of risk.

Required:

Prepare and critically discuss a mortgage sales forecasting model from the following time series, annual sales data. Predict the mortgage lending rate and mortgage sales for the next two years. Hint: Use multiple regression analysis.

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Year 30-yr fixed lending rate (%) Historical sales data Mortgage sales S 123456782228585 7.38% 8.04% $9 560000 9440000 9.19% 9470000 9.04% 9507000 8.86% 9625000 8.84% 9757000 9.63% 9850000 11.19% 9846000 9 13.77% 8400000 10 16.63% 7950000 11 16.08% 8200000 13.23% 8920000 13.87% 8580000 12.42% 9320000 10.18% 9570000 10.20% 11350000 10.34% 11260000 10.32% 11350000 19 10.13% 11160000 20 9.25% 11160000 8.40% 11320000 7.33% 11470000 8.35% 11470000 7.95% 11630000 7.80% 11790000 7.60% 12 130000 6.94% 12220000 7.43% 12470000 29 8.06% 12570000 30 6.97% 12720000 6.54% 12600000 5.82% 12570000 33 5.84% 10330000 5.86% 11 660000 6.41% 13200000 6.34% 13090000 ? 38 ? ? ?