M Report – Tory Barringer
Next year’s mortgage numbers are on track to fall off by nearly a third as the decline in refinances outpaces the slow growth of purchase originations, according to a forecast released Tuesday by the Mortgage Bankers Association (MBA). MBA said it expects mortgage originations to total $1.2 trillion through 2014, a 32 percent decline from 2013’s estimate, which was upwardly revised to $1.7 trillion based on Home Mortgage Disclosure Act (HMDA) data released in September.
While purchase loan volume is projected to rise 9 percent to $723 billion next year, MBA predicts refinances will plummet 57 percent to $463 billion. Those trends are expected to continue into 2015, with purchase loans totaling $796 billion and refinances falling further to $433 billion—resulting in a slight overall increase in origination volume from 2014 to 2015. “We expect mortgage rates will increase above 5 percent in 2014 and then increase further to 5.3 percent by the end of 2015,” said Jay Brinkmann, chief economist and SVP for the association.
“As a result, mortgage refinancing will continue to drop, and borrowers seeking to tap the equity in their homes will be more likely to rely on home equity seconds rather than cash-out refinances.”