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Mortgage Lending Volume Expected to Rise 7% in 2015


After what seemed like a dismal few weeks, some good news is finally streaming back into the mortgage world.

First off, mortgage rates are super low again, with the 30-year fixed pricing below 4% at some lenders. It sounds like a broken record but I doubt anyone is complaining.

And because interest rates have returned to near-record lows, the Mortgage Bankers Association has upped its origination forecast for 2015.

The group revealed its forecast for 2015 this afternoon, guessing that total residential mortgage volume will be around $1.19 trillion next year.

If it happens, it’ll represent a seven percent increase from 2014, which is somewhat of a surprise given the recent downturn in lending.

Of course, things can shift pretty quickly in mortgage land, and anything contingent on interest rates will remain an estimate and nothing more.

However, the fact that Fannie and Freddie will again accept mortgages with 3% down payments should provide another boost, assuming such loans become widely available.

Purchase Loans Will Rise 15% in 2015

mortgage volume

The MBA expects purchase originations to increase to $731 billion in 2015, up from $635 billion in 2014. That’s a healthy 15% increase, though not enough to get anywhere close to the numbers seen in 2012 and 2013.

The projected rise is partially related to the low rates and also the result of an improving labor market, which should translate into more home sales as household formation improves.

They believe monthly job growth will average 220,000 in 2015, while the unemployment rate is on pace to fall to 5.4% by the end of 2015 and to 5.2% in 2016.

Meanwhile, refinance loans are expected to dip to $457 billion in 2015 from $471 billion this year, though the MBA does expect an uptick as recent home price gains will allow more homeowners to refinance with positive home equity. Of course, that also means fewer borrowers will be utilizing HARP.

Either way, it won’t be enough to fend off home purchase loans. The purchase share of total mortgage volume should rise to roughly 62% in 2015, up from 57% this year.

And it is expected to increase to nearly 68% in 2016 as purchases continue to dominate the mortgage market, mainly because refinancing won’t benefit many individuals going forward.

For 2016, the MBA believes purchase origination volume will climb to $791 billion, while refinance originations are expected to dwindle down to $379 billion. Yikes.

That equates to total volume of $1.17 trillion, just below the 2015 forecast.

So the news is perhaps a little bittersweet, though home equity lending could also play a major role as homeowners look to tap equity without losing out on their ultra low first-mortgage rates.

For the record, the MBA also upwardly revised its 2014 origination estimate to $1.11 trillion from $1.01 trillion, and its 2013 estimate to $1.85 trillion from $1.76 trillion to reflect the most recent Home Mortgage Disclosure Act (HMDA) data release.

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