“We have revised upwards our estimates and forecasts for home sales and home prices, and the cash share of purchases has declined. All of these factors point to higher levels of purchase originations,” MBA wrote in a release. “Revisions to our purchase origination forecast in July result from changes in our expectations about the rate at which purchase applications and housing sales translate into dollars of mortgage originations.”
MBA Chief Economist Mike Fratantoni and MBA economists Lynn Fisher and Joel Kan, who wrote the release, are just as optimistic for 2016.
They are forecasting $885 billion in 2016 – an increase of $94 billion from their previous estimate.
“More sales are being financed, and more applications are being approved,” they write. “And we expect that this trend will continue into 2016 and beyond, as the broader economy and job market continue to improve.”
One area originators are expected to struggle in next year is refinances, however, with MBA forecasting rates to edge up to 4.5 percent by the end of the year. They also expect to the Fed to hike its benchmark rate in September.
“However, the positive of the stronger job market will outweigh any negative of somewhat higher mortgage rates,” they write.
The Mortgage Bankers Association (MBA) revised its outlook for originations this year, upping its forecast to $801 billion in volume from its previous estimate of $730 billion just a month ago.