The Mortgage Bankers Association (MBA) expects to see $1.3 trillion in mortgage originations during 2013, largely driven by a spillover of refinances into the first half of the year. The trade group has also upwardly revised its estimate of originations for 2012 to $1.7 trillion.
Furthermore, the MBA expects to see purchase originations climb to $585 billion in 2013, up from a revised estimate of $503 billion for 2012. In contrast, refinances are expected to fall to $785 billion in 2013, down from a revised estimate of $1.2 trillion in 2012.
‘We expected 2012 originations to be front-loaded in the first half of the year, with refis falling off with rate increases,’ says Jay Brinkmann, the MBA's chief economist. ‘Instead, we saw the refinance market grow during the year due to a combination of low rates, thanks to QE3 and slowing global growth because of continuing problems in Europe, and adjustments in the HARP and FHA refinance programs. We expect 2013 refinance originations to play out like our original expectations for 2012, with a long tail of refis extending through the first half of the year, followed by a rapid drop-off in the second half.
‘In contrast,’ Brinkmann adds, ‘we expect a 16 percent increase in purchase originations in 2013 over 2012, with every quarter in 2013 exceeding the same quarter of 2012. The increase in purchase volumes will be driven by continued modest growth in the economy, an increase in owner-occupied sales financed with mortgages – as opposed to cash purchases by investors – an increase in new home sales and a small increase in average home prices. This assumes that changes in the regulatory environment during 2013 are not unduly disruptive in terms of their constraints on available credit, and Federal Housing Administration (FHA) and/or Fannie Mae/Freddie Mac do not notably tighten their credit policies. FHA and other government programs accounted for 43 percent of purchase originations in 2011 and have been averaging 38 percent of purchase applications in 2012.’