Forecasting and advisory services firm iEmergent has downwardly revised its 2024-2026 U.S. Mortgage Origination Forecast and now expects lower-than-anticipated growth for the next two years, particularly in the purchase market.
While refinance volumes are projected to rise due to a gradual decline in mortgage rates, purchase volume has fallen short of early-year estimates due to persistently high interest rates and continued housing affordability challenges.
As a result, 2024 purchase mortgage originations are now projected to decrease in loan count compared to 2023, though an increase in average loan sizes will lead to a modest 3.5% increase in purchase volume.
Meanwhile, refinance originations are expected to rise 48% from their 2023 lows, driven by the recent softening of mortgage interest rates.
Looking ahead, iEmergent forecasts purchase volume will grow by 7% in 2025, while refinance originations will increase by 37%, reflecting a more favorable interest rate environment.
By 2026, overall mortgage origination volumes are expected to show modest recovery as housing affordability gradually improves.
“The economic boon of the COVID-era refinance boom has been under-appreciated in its impact on keeping interest rates higher for longer than anticipated,” says Mark Watson, chief economist for iEmergent, in a release. “While this has helped maintain economic strength, it has also suppressed mortgage origination volumes. We expect rates to finally start declining in the months ahead, offering some relief for both potential buyers and those looking to refinance.”
Photo: Nicole Avagliano