The Mortgage Bankers Association (MBA) has lowered its expectation for a surge in refinances over the next two years as it sees mortgage rates falling much more slowly than in previous forecasts.
The MBA’s Nov. 21 forecast gives up on the idea that mortgage interest rates will fall appreciably over the next two years.
The MBA's Nov. 21 forecast expects interest rates on 30-year fixed-rate mortgages will end this year at 6.6% and next year at 6.4%. The Oct. 27 forecast expected the rate to be 6.3% Dec. 31 and 5.9% at the end of 2025.
Continuing high interest rates following a period of historic lows dried out the refinance market. It bottomed out last year, and this year has had strong gains.
The MBA's Nov. 21 forecast lowered its expectations for refinances by 5.9% for the fourth quarter, 15% for 2025 and 6.1% for 2026.
It now expects refinances to rise nearly four-fold to $190 billion in the fourth quarter, rise 46% to $718 billion in 2025 and fall 6.1% to $757 billion in 2026.
The MBA lowered its forecasts for purchase originations only 1% to 2% from 2025 through 2027, reflecting downward revisions for sales of both new and existing homes.
It still expects fourth-quarter purchase mortgage originations to be just 0.3% hgher than in 2023's fourth quarter. Purchases are expected to rise 11% to $1.4 billion in 2025, 13% to $1.6 billion in 2026 and 4% to nearly $1.7 billion in 2027.
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