The Mortgage Bankers Association (MBA) has slightly lowered its expectations for originations in the first half as rates have remained higher for longer than it expected.
The MBA’s Jan. 19 forecast released Tuesday showed $926 billion in total originations in the six months ending June 30. That’s 1.7% lower than it expected in its Dec. 19 forecast, but still 15% higher than the first half of 2024.
The MBA barely lowered its forecast for first-half purchase originations by 0.6% to $638 billion. The revised amount is 1.8% higher than a year earlier.
It lowered its refinance originations forecast by 4% to $288 billion. The revised amount is 61% higher than a year earlier.
In its Sept. 23, 2024 forecast, the MBA expected first-half 2025 originations to rise 45% to $1.17 trillion. Refinances were expected to more than double from $179 billion in 2024’s first half to $439 billion in 2025’s first half. Purchases were expected to rise 17% to $733 billion.
However, four months ago the MBA also expected interest rates to be falling faster.
Its Sept. 23 forecast called for 30-year fixed rates to drop to 6.2% on first mortgages by Dec. 31, 2024 and to 5.8% by December 2025.
It’s been raising those rates since then. Its Jan. 19 forecast called for mortgage rates to fall from 6.7% in December 2024 to 6.5% by the end of this year, upward revisions of 10 basis points for both dates from its Dec. 20 forecast.
The MBA’s applications index report released Wednesday showed rates were 7.20% in the week ending Jan. 17, up 13 basis points from a month earlier and up 24 bps from a year earlier.
“Mortgage rates remained near 7%, a key psychological level, which likely continues to slow the pace of activity for both refinances and purchases,” MBA Chief Economist Mike Fratantoni said. “Incoming economic data are likely to keep the Federal Reserve on hold for now, while uncertainties about economic policy are likely to keep longer-term rates, including mortgage rates, steady at these levels.”
MBA economists have also soured on prospects for home sales, despite forecasting higher growth in the overall economy.
In September they thought existing home sales would fall 0.9% in 2024 and rise 8.7% in 2025. The Jan. 19 forecast shows sales fell 1.8% last year and will rise 5.3% this year.
In September they thought GDP would rise 2.0% in 2024 and 1.3% in 2025. They’re forecasting a 1.9% gain this year, following the 2.5% gain in 2024.
Contact Jim DuPlessis at [email protected].
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