The Mortgage Bankers Association on Monday lowered its forecasts for both this year and next year, as well as purchase and refinancing origins.
MBA President and CEO Bob Broeksmit told creditors Monday that the mortgage boom of the last two years has ended and creditors need to be ready to handle small quantities.
“After the heights of the stratosphere in 2020 and 2021, the market is returning to Earth,” a prepared statement to those attending the MBA’s 2022 Secondary & Capital Markets Conference & Expo in New York. So, Bruksmitt said.
“To some extent, the headwind we were expecting has finally arrived,” he said. “Rising interest rates are putting pressure on new loans and refinements, and after rising, the focus is now on shrinking.”
A separate May 16 forecast showed that MBA analysts are raising expectations for mortgage rates while lowering expectations for economic growth and sales of existing homes.
As a result, not only is the amount of refinancing reduced, but so is the purchase.
The Bruxmit told lenders at the meeting that the MBA’s analysis still holds the “cause of hope.”
“First and foremost, the market is already pricing for most of the rate hikes expected by the Federal Reserve,” Bruxmitt said. “We don’t expect mortgage rates to be much higher than they are today. There is a lot of volatility, but if it hasn’t stagnated yet, it will soon stall.”
The number of purchases this year will drop 8% to 1.7 million, but the steadily rising house prices will make it a record high, Bruksmitt said.
Lenders are expected to generate $ 1.69 trillion in purchase origin this year, up 2.9% from 2021. It is expected to increase 3.1% to $ 1.75 trillion in 2023. However, these originations are about 5% lower than expected on March 21st.
Refinancing was expected to decline sharply this year, but new forecasts mean refinancing is declining even faster and deeper.
The MBA currently forecasts refinancing to fall 65% this year to $ 819.0 billion and by 2023 a further 26% to $ 608 billion. The MBA has reduced its refinancing origin this year by about 5% from its March 21 forecast. The refinancing origins for 2023 were unchanged in the April 13 forecast, but were chopped up to 10% in the May 16 forecast.
Last month, the National Association of Real Estate Agents reported that existing home sales fell in the second row in March. Sales were down 2.7% from February to a seasonally adjusted annual rate of 5.77 million in March. Over the last 12 months, sales have fallen 4.5%.
Lawrence Yun, chief economist at NAR, said the housing market is responding to sharply high mortgage rates, indicating that inflation is declining purchasing power. Homes continue to sell rapidly and prices are still rising at double-digit rates, but Yun says sellers shouldn’t expect easy profit growth and look for multiple offers that decline as demand subsides. I said it should be.