October 20th, 2015 5:05 PM by Eric Fang
There was good news and bad news from the Mortgage Bankers Association (MBA) as it made 2016 economic predictions to its members gathered in San Diego for MBA's 102nd annual convention. First the good news. MBA sees purchase mortgage originations rising by 10 percent over 2015 to a total of $905 billion. Purchase originations had jumped from $759 billion in 2014 to an anticipated $821 billion this year.
However, (here's the bad news) that gain will be offset, although certainly not unexpectedly, by a drop of one-third in refinancing. The Association expects refinancing volume next year be $415 billion, down from a projected $630 billion this year.
The total of mortgage originations will therefore decline from an expected $1.45 trillion in 2015 to $1.32 trillion in 2016. Further it will remain flat in 2017, dipping about $1 billion over all compared to 2016. Even as purchase mortgages increase again to $978 billion the gain will be wiped out by a further decline in refinancing to $331 billion.
"We are projecting that home purchase originations will increase in 2016 as the US housing market continues on its path towards more typical levels of turnover based on steadily rising demand and improvements in the supply of homes for sale and under construction." Michael Fratantoni, MBA's Chief Economist and Senior Vice President for Research and Industry Technology said. "Despite bumps in the road from energy and export sectors, the job market is near full employment, with other measures of employment under-utilization continuing to improve. We are forecasting that strong household formation, improving wages and a more liquid housing market will drive home sales and purchase originations in the coming years."