The mortgage pipeline heading into the first quarter is slightly stronger than a month earlier, but otherwise, Mortgage Bankers Association economists haven’t indicated any further changes in their latest forecast.
The forecast for December 21 for purchase arrangements has been revised by 4% for the first quarter of next year, an amount 12.5% higher than in the previous year. First quarter refinancing packages were revised 3.3% to $ 317 billion, down 59% from the previous year.
The net effect has been an upward revision of 3.7% for total creations since its forecast on November 22. They are expected to rise to $ 677 billion for the first quarter, down 38% from the previous year.
Mortgage originations are expected to reach $ 3.93 trillion for the full year 2021, down 4.3% from a record high of $ 4.1 trillion in 2020. The Next year, MBA predicts they will drop 34% to $ 2.61 trillion as the refinancing boom collapses and the buying market grows 8%.
Purchase fixtures in 2021 are expected to rise 8.8% to $ 1.61 trillion, which, according to an MBA press release, would eclipse the previous record of $ 1.51 trillion in 2005. ” Purchase fixtures are expected to eclipse the 2021 record and hit $ 1.74 trillion in 2022, supported by strong housing demand and rising home prices and sales.
MBA predicts refinancing fixtures to hit $ 2.32 trillion in 2021 – down 11.6% from $ 2.63 trillion in 2020, but still the third highest on record. Refinancing packages are expected to drop to $ 870 billion in 2022.
The underlying changes in the Dec. 21 forecast were stronger than expected single-family housing starts and existing home sales in the fourth quarter and first quarter, while new home sales were weaker than expected in forecast for November 22.
MBA also provides for:
- House price growth will slow to 5.1% in 2022, from 16.1% in 2021.
- Mortgage rates will rise throughout the year and hit 4.0% by December 2022, which MBA has said since its Oct. 17 forecast.
- Economic growth will be 4.0% in 2022, after declining 2.3% in 2020 and gaining 5.5% this year.
- The unemployment rate, which climbed to 13% in the second quarter of 2020, will end this year at 4.3% and fall to 3.5% by the end of 2022.