MBA predicts record purchasing volume this year
The Mortgage Bankers Association (MBA) is predict a record year for mortgage initiations. The Association’s Chief Economist and Senior Vice President Mike Fratantoni told attendees at the Spring MBA Conference and Exhibition that these creations are set to grow 16.4% this year, setting a new probable high at $ 1.67 trillion. The refinancing, however, will cause the overall origins volume to drop from last year’s record of $ 3.83 trillion to $ 3.28 trillion, a drop of 14%. It would always be the third highest volume ever recorded.
“The housing market is incredibly strong this year, with strong housing demand in almost every part of the country, driven by the improving economy, with households seeking more indoor and outdoor space, with millennials reaching their peaks. best years of buying a home and still low mortgage rates. Said Fratantoni. “A lack of supply is the biggest obstacle to an even greater increase in home sales. The growing imbalance of supply and demand is driving up house price growth and eroding affordability – especially for entry-level buyers. “
Mortgage rates are expected to continue climbing to around 3.7%, contributing to a further slowdown in refinancing demand. Refinance initiations are expected to fall 33% to $ 1.62 trillion.
“The volume of refinancing has already slowed due to the sharp rise in mortgage rates since January,” said Fratantoni. “Mortgage lenders should continue to prepare for the transition to a strong buying market and slowdown in refinancing activity. “
The economist has predicted that the recent enactment of the American Rescue Plan and the ongoing rollout of the vaccine will boost the economy, households and businesses throughout the summer. He expects GDP to grow 6.5% this year after contracting 2.4% during the 2020 pandemic.
“The economy will continue to recover, with rapid employment growth, especially in the hardest hit service sectors,” said Fratantoni. “Job growth is certainly positive, but this environment paves the way for higher mortgage rates and faster inflation. However, if housing inventory levels improve and help keep affordability under home sales are expected to remain strong in 2022. “