MBA Forecasts What Next Year Holds For Originations

The Mortgage Bankers Association (MBA) says it is expecting to see $1.19 trillion in mortgage originations during 2015 – a spike of 7% from the levels of 2014. While the MBA anticipates purchase originations will increase 15%, it expects refinance originations to decrease 3%.

The forecast also says purchase originations will increase to $731 billion in 2015, up from $635 billion in 2014. In contrast, refinances are expected to drop to $457 billion – from $471 billion – in 2014.

And, for 2016, the MBA is forecasting purchase originations of $791 billion and refinance originations of $379 billion – for a total of $1.17 trillion.

"We are projecting that home purchase originations will increase in 2015 as the U.S. economy continues on its current path of stronger growth, job gains and declining unemployment," says Michael Fratantoni, the MBA's chief economist and senior vice president for research and industry technology. "The job market has shown sustained improvement this year, with robust monthly increases in both payroll jobs and job openings. We are forecasting that strong job growth, coupled with still low mortgage rates, should translate to an increase in home sales and purchase originations."

He says the MBA's forecast for "overall economic growth" is 2.9% for 2015 and 2.4% for 2016 – "driven mainly by strong consumer spending and business fixed investment." He adds that "after several years of contraction, the rate of government spending should no longer be a drag on the economy."

Fratantoni says the association expects the 10-year Treasury rate to stay under 3% during the first half of 2015 "as concerns about broader global issues have caused a flight to quality, with investors seeking safety in U.S. Treasury securities." The rate will go above 3% in the second half and continue to rise in 2015, however, "if the global turmoil diminishes and U.S. economic growth continues."

He says the MBA also "expect[s] the Federal Reserve will keep short-term rates near zero until mid 2015."

"With the recent drop in mortgage rates, some borrowers now have an incentive to refinance, and with the home price gains of the last two years, more homeowners have enough equity to refinance, so we expect a pickup in refinance application activity over the next few months, which will lead to higher refinance originations in early 2015," Fratantoni concludes.

The MBA says it upwardly revised its estimate of originations for 2014 to $1.11 trillion from $1.01 trillion – and for 2013 to $1.85 trillion from $1.76 trillion – in order to reflect the most recent data reported in the 2013 Home Mortgage Disclosure Act data release.


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