The Mortgage Bankers Association (MBA) raised its outlook for 2016 residential origination volume in a revised mortgage forecast released in February. The forecast now calls for total residential origination volume this year of $1.483 trillion. That remains lower than the upwardly revised $1.63 trillion for 2015. The prior MBA forecast had 2015 origination volume coming in at $1.49 trillion.
MBA's Forecast Commentary states, "We also raised our expectation for both purchase and refinance originations in 2016 given the higher starting point and also a lower rate outlook for 2016. Despite the recent surge in refinance activity as rates have dropped, we still expect to end the year in a purchase-dominated market."
The revised forecast pegs purchase volume last year at $881 billion and refinance volume at $749 billion. For this year, the volume for purchase originations is set to increase to $963 billion, while refinance volume is expected to drop to $520 billion.
The revised MBA forecast sees the refinance share falling to 35 percent of originations this year, down from 46 percent in 2015.
Mortgage interest rates for 30-year, fixed-rate loans are expected to average 4.1 percent this year.
The new MBA forecast expects to see the U.S. economy returning to "trend growth levels of about 2 percent in 2016," according to MBA.
The commentary noted that the silver lining to the financial market volatility that drove down domestic interest rates early this year is that mortgage rates dipped below 4 percent again. The February research note said that as a result of the drop in mortgage rates, the market saw a "60 percent increase in refinance activity between early January and February's most recent data point. While a majority of borrowers already have mortgages with rates below 5 percent, there are still borrowers rebuilding their equity and financial positions who benefit from refinancing at these lower rates."
The new forecast predicts total existing-home sales this year will reach 5.477 million compared with 5.232 million in 2015...