Mortgage Originations Expect 7% Hike in 2015

The Mortgage Bankers Association (MBA) raised its expectations for mortgage performance in 2015 with a strong outlook for originations in the next year.

MBA announced Tuesday that it expects to see $1.19 trillion in mortgage originations during 2015, a 7% increase from 2014. Additionally, the Association also anticipates purchase originations will increase 15% to $731 billion next year, while refinance originations are expected to drop 3% to $457 billion. 

“We are projecting that home purchase originations will increase in 2015 as the US economy continues on its current path of stronger growth, job gains and declining unemployment,” said Mike Fratantoni, MBA’s chief economist and senior vice president for research and industry technology in a written statement. “We are forecasting that strong job growth, coupled with still low mortgage rates, should translate to an increase in home sales and purchase originations.”

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For 2016, MBA is forecasting purchase originations of $791 billion and refinance originations of $379 billion, for a total of $1.17 trillion.

MBA revised its estimate of originations upward for 2014 to $1.11 trillion from $1.01 trillion, and for 2013 to $1.85 trillion from $1.76 trillion, to reflect the most recent data reported in the 2013 Home Mortgage Disclosure Act data release.

There is optimism for activity on the refinance side in the year ahead, especially as low mortgage rates provide further encouragement for borrowers who have been seeing their equity return following the market crash.

“With the recent drop in mortgage rates, some borrowers now have an incentive to refinance and with the home price gains of the last two years more homeowners have enough equity to refinance, so we expect a pickup in refinance application activity over the next few months, which will lead to higher refinance originations in early 2015,” said Fratantoni.

Overall, MBA projects economic growth of 2.9% in 2015 and 2.4% in 2016, gains which will be driven mainly by strong consumer spending and business fixed investment, as households continue to spend on durable goods such as cars and appliances, and as businesses invest in new plant and equipment. 

“Moreover, after several years of contraction, the rate of government spending should no longer be a drag on the economy,” Fratantoni said.

The 10-Year Treasury rate will remain below 3% through the first half of next year, however, if U.S. economic growth continues and global turmoil diminishes, MBA expects the rate will exceed 3% in the second half of 2015 and will continue to increase through 2016. 

“We expect the Federal Reserve will keep short-term rates near zero until mid 2015, when we expect to see the first fed funds rate increase,” said Fratantoni. 

Written by Jason Oliva

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  • Could HECMs for Purchase increase total HECM endorsements by 7% this fiscal year? Please excuse the sneer.

    Increased home values over the last three years have not produced any significant increase to our HECM endorsement totals. In fact, with home prices at their peak, we have just finished the worst fiscal year for endorsements in nine fiscal years.

    Six years of Baby Boomers turning 62 has had absolutely no positive impact on our endorsement numbers. Since the first year Baby Boomers began turning 62, there have only been three fiscal years with slightly higher totals than the fiscal year that immediately preceded it; those fiscal years were 2008, 2009, and 2013. Fiscal years 2010, 2011, 2012, and 2014 have shown miserable results with fiscal years 2012 and 2014 reporting less than 50% of the total HECMs endorsed in fiscal 2009.

    While we can give excuses about regulatory actions, when is it that we can reasonably and rationally expect a real turnaround? While conference attendees may yell for 100,000 endorsements this fiscal year, such cheers are worthless as seen by such conduct at the 2010 NRMLA Convention and endorsement results for fiscal 2011 and each fiscal year thereafter. While few doubt we will see our first year of 100,000 endorsements before fiscal year 2021, how soon will it come? Despite the Extreme Summit will endorsement totals for fiscal 2015 be less than 50,000?

    As of yet there has been no valid investigation as to why endorsements did not just fall but continue to fall when 1) Principal Limit Factors equal to and greater than those available prior to pre 2013 changes were available, 2) 10,000 Baby Boomers have been turning 62 every day for six years now, 3) home prices have been rising for over three years and in many places very near their prior peaks, 4) few reputable reports show Baby Boomers are financially prepared for retirement, 5) few Baby Boomers enter into retirement not owning a home, and 6) the average Baby Boomer is carrying three times the debt their predecessors did but such debt on average is less than $65,000. When we hear that financial advisors and HECMs for Purchase are the hope of the industry in bailing ourselves out of this situation, all one can do is feel very exasperated. As many have said before, relying on financial advisors to bail us out will prove itself to be terribly wrong and nothing has shown how HECMs for Purchase will do more than change our endorsement situation very marginally one direction or the other just as it has done in the past.

    While my predictions for the future during 2008 and 2009 were conservative when compared to others, they pointed to strong growth. As an originator, the road in our industry over the last few years has been a rough one.

    • I am one of those baby boomers planning to escape the cold and high taxes in Chicago
      for Florida in a year. The HECM for purchase is a great product for me and other near retirement professionals with healthy 401Ks ready to roll over
      into IRAs. Don’t believe everything you hear about us boomers. A lot of us are NOT BROKE. I know because the 55+ activity retirement communities I am investigating are booming. The Villages
      in FL let the nation in new home purchases last year at 3,400. I had planned to put down $150K on a $300K home. But now that I stumbled upon
      this program I can make the planned down payment and never have to make a mortgage payment again. How GREAT is that!

      Your industry has a marketing and image problem. Marketing 101…..know your customer and target them. All I see is ads marketing the loan program to broke and desperate retirees that need the equity from their home to make ends meet.

      Why isn’t your industry at the 55+ activity communities and in their trade publications? These are the folks that can afford and benefit
      from a HECM for purchase.

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