Purchase Originations Expected To Grow 16.4 Percent
Purchase originations are forecasted to grow 16.4%, hitting a new record of $1.67 trillion in 2021, announced the Mortgage Banker Association (MBA) at their 2021 Spring Conference and Expo.
MBA expects volume to fall 14% this year, from $3.83 trillion to $3.28 trillion, which is still the third-highest total ever. Meanwhile, mortgage rates are expected to keep on rising to 3.7%, further slowing the refinance demand. In 2021, refinance demand is expected to fall 33% to $1.62 trillion.
"Mortgage lenders should continue to prepare for the transition to a strong purchase market and slowing refinance activity," advised Mike Fratantoni, chief economist and senior vice president for Research and Industry Technology. "Refinance volume has already trailed off because of the steep climb in mortgage rates since January."
Throughout the summer, Fratantoni expects the American Rescue Plan and vaccine rollout will continue to provide a lift to the economy, households, and businesses. He also forecasted economic growth to reach 6.5% in 2021, after last year’s pandemic-induced contraction of 2.4%.
"The job growth is certainly positive, but this environment sets the stage for higher mortgage rates and faster inflation. However, if housing inventory levels improve and help to keep affordability in check, home sales should remain strong into 2022," Fratantoni added.
MBA's April Mortgage Finance Forecast and Economic Forecast can be viewed here.
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