Mortgage bankers have lifted their estimate of overall originations from last year through 2018 by more than $300 billion — including an over $250 billion boost to refinances.
Overall mortgage originations are expected to amount to $470 billion during the final-three months of this year then fall to $400 billion in the first three months of next year.
Residential loan production, which includes refinances and purchase financing, is then expected to bounce back up in the second quarter of next year — reaching $440 billion.
The Mortgage Bankers Association, which made the predictions Tuesday
in its MBA Mortgage Finance Forecast, improved its outlook from last month, when it expected originations to go from $417 billion to $366 billion in the first-quarter 2017 then rise to $430 billion three months later.
Purchase-money production is projected to slip from $232 billion this quarter to $220 billion in the first-quarter 2017. The previous outlook had purchase activity falling from $223 billion to $205 billion.
Fourth-quarter refinance volume is predicted to be $238 billion, while just $180 billion is expected three months later. MBA increased its refinance outlook from $194 billion for the current quarter and $161 billion in the following three-month period.
The full-year 2015 estimate of mortgage originations has been increased to $1.679 trillion from $1.630 trillion as a result of the most-recent data reported in the 2015 Home Mortgage Disclosure Act data release. Purchases made up $0.903 trillion of last year’s estimated activity, while refinances totaled $0.776 trillion.
The overall
forecast for this year was raised to $1.891 trillion from $1.838 trillion last month, while the 2017 outlook increased to $1.629 trillion from $1.540 trillion, and the 2018 projection rose to $1.588 trillion from $1.446 trillion.
MBA added a 2019 forecast of $1.640 trillion — including $1.245 trillion in purchase financing and $0.395 trillion in refinances.
The 2016 outlook for purchase-money production grew $0.009 trillion from the September outlook to $0.990 trillion. Next year’s purchase outlook increased $0.015 trillion to $1.100 trillion, and the 2018 forecast rose $0.033 trillion to $1.178 trillion.
“Strong household formation coupled with further job growth, rising wages and continuing home price appreciation will drive strong growth in purchase originations in the coming years,” MBA Chief Economist Michael Fratantoni stated in an accompanying announcement.
Refinances are now expected to reach $0.901 trillion this year, up $0.044 trillion from last month’s forecast. The 2017 refinance outlook increased $0.074 trillion to $0.529 trillion, and the following year’s projection expanded $0.109 trillion to $0.410 trillion.
“With the Brexit vote in June, and with the financial market volatility earlier in the year, refinance volume was much higher than anticipated,” Fratantoni added. “The world is an uncertain place, and there is always a chance that rates could drop again in response to global turmoil, but we expect that refinance volume will most likely be much lower over the next few years as homeowners have repeatedly had the opportunity to lower their rates, and there will be fewer households with an incentive to refinance if rates follow the path we are projecting.”
This year’s refinance share is expected to be 48 percent. Refinance share is then expected to diminish to 32 percent, 26 percent and 24 percent in 2017, 2018 and 2019, respectively.
