Meet the new year, same as the old year

Mortgage origination volume will be little changed in 2018 as refis drop, one firm predicts

Meet the new year, same as the old year
Mortgage purchase volume will show strong gains in 2018, but refinance originations will tumble, according to one new forecast.

iEmergent, an Iowa-based forecasting and advisory firm dedicated to the lending industry, recently released its latest mortgage-volume forecast for 2018-2022. The firm projects a strong 9.9% increase in purchase volume, which it projects will reach $1.18 trillion. However, iEmergent expects refi originations to fall to a range of $530 billion to $638 billion. Thus, total origination volume will only grow by about 0.7% to a range between $1.71 trillion and $1.83 trillion, the company predicted.

“For 2018, we expect that the solid economy, robust job market and strengthening household balance sheets will drive healthy increases in the purchase segment,” said Mark Watson, chief analytics officer for iEmergent. “For the refinance sector, we see another decline, but not as steep as other forecasters are expecting, due to a still-low mortgage interest rate environment. On balance, 2018’s mortgage origination volume will be little changed from 2017.”

According to iEmergent, strong home-price appreciation is expected to continue through 2018, with low inventory continuing to dampen sales. However, homeownership rates are rising again, led by gains among millennials.

“A continuing trend we’re seeing is that traditional banks are becoming less active in mortgage lending as independent mortgage lenders increase their market share,” Watson said. “Independents are also leading the way at expanding credit availability to borrowers with lower FICO scores.”

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