For those who believe the market for mortgage originations is growing at a healthy clip, the Mortgage Bankers Association just shared some bad news.
During a press conference at its annual meeting being held right now in San Diego, the MBA said it expects a 10% increase in purchase mortgage originations next year compared to 2015.
While the MBA estimates purchase mortgage originations to reach $905 billion, refinance originations are predicted to decrease by one-third, resulting in refinance mortgage originations of $415 billion.
On net, mortgage originations will decrease to $1.32 trillion in 2016 from $1.45 trillion in 2015. And it gets even worse from there.
Looking further ahead, for 2017 MBA is forecasting purchase originations of $978 billion and refinance originations of $331 billion for a total of $1.31 trillion.
As for why they expect growth in purchase mortgages, Michael Fratantoni, chief economist and senior vice president of research and industry technology with the MBA, attributed it to a mixture of factors, including a growing demand in households from renting and mortgage finance options.
“We are projecting that home purchase originations will increase in 2016 as the US housing market continues on its path towards more typical levels of turnover based on steadily rising demand and improvements in the supply of homes for sale and under construction,” said Fratantoni.
Meanwhile, the MBA forecasts that the Federal Reserve will increase interest rates in December.
However, Fratantoni noted with it’s an odd situation right now with the Fed and believes there is only a 50% to 60% of this happening in December.