Cheap financing is pushing mortgage lending to the highest level in 13 years, to the time before bad loans crashed the global economy.
Low mortgage rates will likely cause home-loan originations to increase to $2.1 trillion in 2019, the highest since $2.3 trillion in 2007, the Mortgage Bankers Association said in a forecast released Tuesday at its annual conference in Austin, Texas.
The average U.S. rate for a 30-year fixed mortgage probably will be 3.6% this year, down from 4.8% in 2018, MBA said.
“Interest rates will, on average, remain lower for longer given the somewhat cloudy economic outlook,” Michael Fratantoni, MBA’s chief economist, said in a statement accompanying the group’s forecast. “These lower rates will, in turn, support both purchase and refinance origination volume.”
The refinancing share probably will rise to 38%, the highest since 2016 when it was 48%, according to the forecast. Refinancing originations in 2019 should total $793 billion, up from $467 billion in 2018.
Loans to purchase homes probably will increase $1.27 trillion this year, up from $1.21 trillion last year, the forecast said. Sales of existing homes should reach 5.4 million, up from 5.3 million in 2018. Home prices likely will gain 4.3%, a slower pace than the 6.1% increase in 2018.
Meanwhile, homebuilders will likely break ground on 878,000 homes in 2019, up from 873,000 last year, the forecast said. That would be the highest since 2007, when builders started construction on 1.05 million houses, according to data from the Department of Commerce.