Less than one month ago, the analysts of FBR & Co. predicted that 2016 could prove to the best year for mortgage lending since 2013, but a new report from those same analysts suggests that 2016 could be even stronger than they predicted.

Driving FBR’s increased projection is a strong 3rd quarter, which could prove to the best for mortgage lending since the 4th quarter of 2007, the analysts state.

In the new report, FBR analysts Paul Miller and Tim Hayes state that they currently estimate that mortgage originations will top $600 billion in the third quarter, topping their previous estimate of $565 billion.

If mortgage originations do indeed exceed $600 billion, that would mean that the 3rd quarter of 2016 is the best quarter for mortgage lending in nearly nine years.

The reasons for the origination surge in the 3rd quarter? A “resilient” purchase market and continued low interest rates that are boosting refinance originations.

And with a stronger than expected 3rd quarter boosting 2016’s originations, FBR’s analysts are now projecting 2016’s total origination volume to top $2 trillion, an increase from the $1.9 trillion they projected last month.

Plus, thanks to the moves, or lack thereof, of the Federal Reserve, 2017 is looking to be a strong year for mortgage lending, too.

“Reflecting the continued low interest rate environment and a rebound in the purchase mortgage market to more normalized levels, we are updating our 2016 industry mortgage originations estimate to $2.0 trillion from $1.9 trillion and our 2017 estimate to $1.8 trillion from $1.75 trillion,” the FBR analysts state.

“We have long adopted the ‘lower for longer’ view toward interest rates, and recent commentary from Fed Chair Janet Yellen seems to reinforce this view, suggesting that low interest rates could support the refi market through next year,” the analysts add.

The FBR analysts also stated that they believe the purchase market is below what their view of normalized levels and will continue to experience positive growth on a year-over-year basis, albeit it at a more modest pace than from 2012 through 2016.

The analysts noted that the trailing four-quarter purchase average jumped to $241 billion, the highest level since the 3rd quarter of 2007.

“Over the last year, average purchase originations have totaled $241 billion on a quarterly basis, which compares to $222 billion merely a year ago and post-crisis lows of $108 billion,” the FBR analysts write.

“These results continue to support our thesis that the ‘new normal’ of $1.5 trillion in sustainable originations is already here,” they continue. “Ultimately, the improvement in the U.S. housing market has been gradual, but we believe purchase volumes will continue to grow and approach $1 trillion in 2017, which is more in line with what we believe to be a ‘normalized’ level.”

The analysts state that there are other reasons that show that the current origination volume is sustainable, namely the “most stable regulatory environment in years.”

The analysts state that regulatory risk consistently figures into the downside risk to their mortgage origination estimates, especially in recent years, as the industry adjusted to the “definition of a qualified mortgage, reworked mortgage disclosures required by TRID, or adjusted credit boxes to avoid rep and warranty risk/specialty servicing risks.”

The analysts say that these new rules and regulations “certainly continue to factor into the overall size of the origination market, but they are no longer the headwind they once were” because the industry has now transitioned and adjusted to the “new” regulatory reality.

“We fully continue to expect some growing pains as regulators continue their supervisory and enforcement activities over the mortgage market,” the FBR analysts state. “However, the lack of any large-scale new regulatory requirement in the mortgage market provides for the most stable regulatory environment in recent memory, which reinforces the confidence we have in our estimates.”