Mortgage Outlook for 2022 Remains on Track: MBA
Mortgage Bankers Association forecast shows only a slight upward revision for the first quarter.
The pipeline for mortgages heading into the first quarter is slightly stronger than a month earlier, but otherwise Mortgage Bankers Association economists indicated no other changes in their latest forecast.
The Dec. 21 forecast for purchase originations was revised 4% for next year’s first quarter, an amount that is 12.5% higher than a year earlier. Refinance originations for the first quarter was revised 3.3% to $317 billion — a 59% drop from a year earlier.
The net effect was a 3.7% upward revision for total originations since its Nov. 22 forecast. They are expected to be $677 billion for the first quarter, down 38% from a year earlier.
Mortgage originations are expected to be $3.93 trillion for the full year of 2021, which is down 4.3% from 2020’s record $4.1 trillion. Next year, the MBA forecast they will fall 34% to $2.61 trillion as the refinance boom collapses and the purchase market grows 8%.
Purchase originations in 2021 are expected to rise 8.8% to $1.61 trillion, which an MBA news release said would eclipse the previous all-time high of $1.51 trillion in 2005. “Purchase originations are forecast to eclipse 2021’s record high and reach $1.74 trillion in 2022, backed by strong housing demand and rising home prices and sales.”
The MBA said it anticipates refinance originations will come in at $2.32 trillion in 2021 – down 11.6% from $2.63 trillion in 2020 but still the third highest ever. Refinance originations are expected to plummet to $870 billion in 2022.
Underlying changes in the Dec. 21 forecast were stronger-than-expected single-family housing starts and existing home sales in the fourth quarter and first quarter, while new home sales were weaker than expected in the Nov. 22 forecast.
The MBA also forecast:
- Home-price growth will moderate to 5.1% in 2022, down from 16.1% in 2021.
- Mortgage rates will rise throughout the year and reach 4.0% by December 2022, which the MBA has been saying since its Oct. 17 forecast.
- Economic growth will be 4.0% in 2022, following 2020’s 2.3% drop and this year’s 5.5% gain.
- The unemployment rate, which spiked to 13% in 2020’s second quarter, will end this year at 4.3% and fall to 3.5% by the end of 2022.