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The Mortgage Bankers Association updated its forecast for 2021. It now estimates that purchase originations are expected to grow 8.5% to a new record of $1.54 trillion in 2021. As for refinances, the MBA stated that while activity jumped 70.9%, it is expected to cool down to 46.3% ($946 billion) in 2021.
These findings were presented at the MBA's 2020 Annual Convention and Expo by Mike Fratantoni, chief economist and senior vice president for Research and Industry Technology; Joel Kan, associate vice president of Economic and Industry Forecasting; and Marina Walsh, CMB, vice president of Industry Analysis. The MBA estimates that originations will total $3.18 trillion in 2020, a total rivaled only by 2003 ($3.81 trillion). Additionally, the MBA sees mortgage originations falling to $2.49 trillion, the second-highest total in the past 15 years, according to the report.
"The economy, labor market, and housing market have all seen meaningful rebounds since the onset of the pandemic, but there is still profound uncertainty. Additional waves of the virus could lead to further lockdowns and more job market instability," said Frantantoni. "On the other hand, another pandemic-related stimulus package would result in faster economic growth and additional support for the housing market, albeit with slightly more upward pressure on mortgage rates."
"2021, particularly the second half, should be a year of continued purchase growth and slowing refinance activity."
The MBA expects that 2020 will cap off with the 30-year fixed-rate mortgage averaging at 3%. It estimates that in 2021, rates will rise to 3.30%.
"The greatest strength in housing demand and applications activity has come from borrowers at the upper end of the market seeking higher-balance loans," said Kan. "The expectation is that credit availability will slowly improve across the spectrum as the economy does over the next year, but some low-income borrowers and first-time buyers will likely face difficulties getting approved for a mortgage."
As for servicing, the MBA still believes that servicers will still have quite the workload on their hands.
"Servicers will remain busy in 2021 helping borrowers exit mortgage forbearance and into longer-term solutions. This will likely result in the operational need for additional loss mitigation personnel and increased servicing costs," said Walsh.