Jul 23 2015
Mortgage Bankers Association (MBA) economists joined in the recent surge of housing optimism Wednesday, increasing their projections for mortgage originations both this year and next. Saying that the housing market recovery has shifted to a higher gear, they now project that purchase mortgage originations will reach $801 billion in 2015 and $885 billion in 2016. The new numbers are an increase of $71 billion this year and $94 billion next year over their previous projections.
Mike Fratantoni, MBA’s Chief Economist, and senior economists Lynn Fisher and Joel Kan said they had also revised upward their estimates and forecasts for home sales and home prices while revising down estimates of cash transactions. All of these point to higher purchase originations.
More sales are being financed, and more applications are being approved the economists said, and this trend is expected to continue into 2016 and beyond, as the broader economy and job market continue to improve. The expectation is that the stronger job market and somewhat higher levels of inflation will lead the Fed to hike in September, and that mortgage rates will hit 4.5 percent by the end of the year. “However, the positive of the stronger job market will outweigh any negative of somewhat higher mortgage rates” the report says.
Refinancing volume however will continue to trend down in response to increasing interest rates. MBA’s forecasts for refinance mortgage originations remains, as last month, at $551 billion in 2015, compared to $484 billion in 2014. As a result, total originations are expected to be $1.35 trillion in 2015 and $1.26 trillion in 2016, compared to $1.12 trillion in 2014.