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MBA: A Modest Increase in Purchase Volume Next Year

Doug Page
Aug 30, 2022
Mortgage Bankers Association Logo

Mortgage volume down modestly in 2023

With the mortgage market coming off of two record-setting years, and currently in a down one, Mortgage Bankers Association (MBA) Chief Economist Mike Fratantoni predicted Tuesday there will be a modest uptick in the purchase market in 2023.

Speaking during the Mortgage Industry Standards Maintenance convention in Washington, D.C., Fratantoni predicted purchase mortgage volume to jump 4% from $1.638 trillion this year to $1.704 trillion next year, while refinanced mortgages will drop 24% from $706 million to $540 million in 2023.

The overall mortgage market will drop to $2.2 trillion from this year's expected $2.3 trillion, he said.

“The macro landscape in with mortgage rates is that they’re 2 to 3 points above where they were over the last couple of years, and, frankly, that’s not friendly to housing,” he said. “Our forecast is for about an 11% decline in existing home sales and an 8% decline in new home sales.”

It’s not just mortgage volume that’s declining, Fratantoni added; the typical lender lost $82 per loan that they made, too.

“Typically, lenders would make 54 or 55 basis points in profit on loans they were making during the peak of the refi boom that got as high as 203 basis points,” he said.

If there’s one thing that’s been unusual about this year, he said, it’s that the entire housing market has been incredibly tight and expensive.

“Rental vacancy rates and homeowner vacancy rates are about as low as they’ve ever been,” he said. “Rents have been going up double digits for years now, and for a lot of younger households it’s a really difficult decision.

“Do they scratch to buy something with a mortgage payment that’s much higher — and, by our data, it’s about $500 higher than last year for the same size house — or do you sign that (rental) renewal and sign up for a 12% increase in rent?”

But there is an upside for younger buyers, he said.

Last year, they were faced with “10 or 15 competing bids, but now they may be the only one making a bid on a property,” Fratantoni said.

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