Mortgage professionals gathered for day two of the Mortgage Bankers Association’s National Mortgage Servicing Conference in Dallas, where the MBA outlined its economic outlook for 2017.
The MBA stated that the economy will see steady, modest growth as the Federal Reserve begins to see some of its economic targets hit. In fact, Lynn Fisher, MBA vice president of research and economics explains these targets being reached could lead to a change in economic policy.
Fisher explained that some alternative measures of unemployment look at not only unemployment, but also underemployed and those who, while not actively looking, would take a job if it was offered. Using that method of measurement, the unemployment rate stands at 9.4%, and the MBA expects it to fall to 9% in 2017.
Also, inflation came in at 2.5% Wednesday, improving the chance of a rate hike in March, according to Fisher. While the MBA still projects the first rate hike will occur in June, the case for March is growing stronger.
And these rising interest rates will bring a 50% decrease to refinance originations, according to the MBA’s forecast.
However, the growing housing inventory will see little relief as the MBA predicts moderate growth for the year at an increase of just 10% in housing starts. Why the delay in construction growth?
“It’s taking up a while to get our construction sector back together,” Fisher explained, citing building permits and finding those with the right experience.
In fact, a report from the summer shows San Francisco’s competitive employment market is causing many construction companies to lose workers and driving a trend towards more expensive housing. However, the market is improving as shown in January’s employment report which showed an unusually high increase of 36,000 construction jobs.