The Mortgage Bankers Association’s (MBA’s) November
2020 economic forecast ups the ante from its rosy October version. Its
revisions are due to the strong pace of home sales and low interest rates which
continue to fuel a refinancing boom. MBA has increased its prediction for total
mortgage originations from the $3.175 trillion estimate in October to $3.39 trillion.
This would be a 50 percent increase from the $2.25 trillion in total
originations in 2019, and the highest total since 2003.
Refinancing, of course, is the driver behind these numbers.
By the end of the year MBA expects those originations to have increased by 91.5
percent year-over-year to $1.97 trillion, potentially the highest total since
2003. Purchasing volume has not been shoddy either. That total is expected to
be the highest since 2005 at $1.42 trillion, representing annual growth of 16
Estimates of origination volume for
the last half of 2020 were also increased. Total volume in Q3 was revised from
$860 billion to $962 billion, and for Q4 from $824 billion to $937 billion.
While overall volume next year is expected to decline,
MBA expects an all-time high for purchase mortgage originations, $1.59 trillion.
If this occurs it would eclipse the previous peak of $1.51 trillion which was
achieved in 2005.Offsetting this good news, however, is an expected cooling of refinance
activity. Those originations will slow to $971 billion, bringing total originations to $2.56
trillion. This would still be the second highest volume in the past 15 years.
expects the economy to rebound next year with a 3.0 percent expansion in the GDP
after a 2.5 percent decline this year. Additionally, the unemployment rate is
expected to improve more rapidly, reaching the 5 percent mark by the end of
2021. MBA predicts mortgage rates will end this year at 2.9 percent and
to increase to 3.3 percent by Q4 2021.