MBA Forecast

Looking forward to next year the Mortgage Bankers Association (MBA) is projecting that overall mortgage originations will drop by a substantial 32 percent in 2014, with originations totaling $1.2 trillion.

The MBA expects purchase originations to increase by 9 percent in 2014.  It also expects refinance originations to drop by a whopping 57 percent.  At present the MBA estimates that overall originations will total $1.7 trillion through the end of 2013.

For 2014 the MBA projects that purchase originations will increase to $723 billion, up from the anticipated $661 billion in 2013.  Refinance originations in 2014 will fall to $463 billion from the expected $1.08 trillion in 2013.

Beyond 2014 the MBA is forecasting that purchase originations in 2015 will increase further to $796 billion with yet a further decline in refinance originations to $433 billion: these combined figures approximately equaling the $1.2 trillion total originations for 2014.

MBA Chief Economist and Senior Vice President for Research and Education, Jay Brinkman, says, “We are projecting home purchase originations will increase in 2014 due largely to gains in home sales and home prices.  We expect to see a decline in the share of sales paid for with cash, and higher average LTVs on purchase mortgages, due to the rise in homes prices.”

In looking at mortgage interest rates, the MBA expects that rates will increase to over 5.0 percent in 2014 (currently they are approximately 4.5 percent), with a further increase to over 5.5 percent in 2015.  Expectations are for mortgage refinancing to continue to decline.

Currently according to the MBA, mortgage rates on 30-year fixed-rate conforming loans is 4.48 percent, though some data shows that the rise in these rates over the past few months have contributed to a slow down in the market, borrowers should understand that the historical average over the past 40 years for this loan type has been 8.6 percent.