MReport November 2021

TheMReport — News and strategies for the evolving mortgage marketplace.

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34 | M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION Mortgage Origination 2022 Forecast to Hit $2.59T While originations are expected to remain solid, refis will further slow next year, decreasing by 62% to $860 billion from $2.26 trillion in 2021. T he Mortgage Bankers Association (MBA) has forecast that purchase mortgage originations are expected to grow 9% to a new record of $1.73 trillion in 2022. After a 14% decline in 2021, the MBA expects refinance originations will further slow next year, decreasing by 62% to $860 billion from $2.26 trillion in 2021. MBA forecasts mortgage origi- nations to total $2.59 trillion in 2022—a 33% decline from this year. In 2023, mortgage originations are expected to decrease to $2.53 trillion. Purchase originations are forecasted to reach new successive records in 2022 and 2023, while higher mortgage rates and fewer eligible homeowners will lead to further declines in refinance volume. "The economy and labor mar- ket rebounded in 2021, but overall growth fell short of expectations because of stubborn supply chain issues that fueled faster infla- tion, slowed consumer spend- ing, and presented challenges in filling the record number of job openings available," said Mike Fratantoni, Chief Economist and SVP of Research and Industry Technology. "With inflation elevated and the unemployment rate dropping fast, the Federal Reserve will begin to taper its asset purchases by the end of this year and will raise short-term rates by the end of 2022." The baseline forecast is for mortgage rates to rise, with the 30-year, fixed-rate mortgage expected to end 2021 at 3.1% before increasing to 4.0% by the end of 2022 according to the MBA. "Mortgage lenders and borrow- ers should expect rising mort- gage rates over the next year, as stronger economic growth pushes Treasury yields higher," Fratantoni said. Freddie Mac's latest Primary Mortgage Market Survey (PMMS) previously found the 30-year fixed-rate mortgage averaging 3.05%, with an average 0.7 points, up from the previous week when it averaged 2.99%. "Historically speaking, rates are still low, but many potential homebuyers are staying on the sidelines due to high home price growth," said Sam Khater, Freddie Mac's Chief Economist. "Rising mortgage rates, combined with growing home prices, make af- fordability more challenging for potential homebuyers." Demand from millennial households, households seeking more space, and still-low mort- gage rates are favorable tailwinds for the housing market in 2022, and are behind MBA's expecta- tions of record purchase origina- tions over the next two years. "The year 2022 should be an- other strong year for the housing market. Home builders will have more success overcoming cur- rent building material shortages and should be able to increase the pace of construction to meet the sizable demand for buying," Fratantoni said. "More newly built homes and more homeown- ers listing their homes for sale should lead to some decelera- tion in home-price growth next year. This is good news for the many would-be buyers who are currently priced out or delaying decisions because of low supply

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