The Mortgage Bankers Association (MBA) recently offered some projections for the remainder of 2015, 2016 and beyond.
There has been talk all year about whether or not the Federal Reserve will increase interest rates. The MBA expects that to happen in December, but MBA chief economist and senior vice president Michael Fratantoni acknowledged the uniqueness of the current mortgage climate indicating that the chance of an increase, though positive, are around 50 to 60 percent.
Looking ahead to next year, the MBA expects purchase mortgage originations to increase by 10 percent when compared to this year, reaching around $905 billion. Fratantoni said that this could result from a number of factors, including a growing demand for households over renting and mortgage financing options.
"We are projecting that home purchase originations will increase in 2016 as the U.S. housing market continues on its path towards more typical levels of turnover based on steadily rising demand and improvements in the supply of homes for sale and under construction," said Fratantoni.
The news, however, wasn't all positive. Refinancing originations will suffer, likely due to an expected rise in interest rates, dropping by one-third to $415 billion next year. Net mortgage originations will decrease in 2016, going to $1.32 trillion from $1.45 trillion this year.
The MBA further expects those trends to continue into 2017. Purchase origins are also expected to rise, moving up to $978 billion, but refinancing will continue to decline, falling to $331 billion. If that holds out, the net mortgage originations will have decreased by $140 billion in two years.
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