Expectations of continuing high interest rates, signs of a weakening housing market and a "coin flip" chance of a recession led the Mortgage Bankers Association to cut its forecast for originations in the second half of this year, and, to a lesser extent, through all of next year.
The MBA's July 18 economic and mortgage forecasts showed second-half purchase originations falling 7% and refinances falling 80% from a year earlier. Its June 10 forecast showed a 5% drop in purchases and 77% drop in refinances for the second half.
"The housing sector has been severely impacted by the spike in interest rates," the MBA said in comments released Thursday. "In an already strained affordability environment, higher mortgage rates have reduced the pace of home sales, and now with the prospect of a weaker economy and an elevated risk of recession, potential home buyers have pulled back even more."
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