Total mortgage origination volume is expected to increase to $1.95 trillion in 2024, says the Mortgage Bankers Association (MBA). That’s up from the projected $1.64 trillion in 2023.
MBA’s Chief Economist and Senior Vice President for Research and Industry Technology Mike Fratantoni, along with Joel Kan, Vice President, Deputy Chief Economist; and Marina Walsh, CMB, Vice President of Industry Analysis, presented MBA’s 2024 outlook at MBA’s 2023 Annual Convention & Expo.
Purchase originations are forecasted to rise by 11% to $1.47 trillion next year. Origination volume is expected to increase by 19%, for a total of 5.2 million loans in 2024. That’s a jump from 2023’s projected 4.4 million.
Fratantoni predicts a mild recession in the first half of 2024. This is due to higher interest rates, tighter credit conditions, and a depletion of pandemic-era household savings.
Lower rates are expected to boost homebuyer demand and increase the inventory of existing homes in 2024. However, the job market is likely to slow down, with fewer jobs added and an increase in the unemployment rate. Fratantoni added that he expects inflation to gradually decline towards the Federal Reserve’s target.
The MBA’s baseline forecast for mortgage rates is 6.1% by the end of 2024 and 5.5% by the end of 2025. The housing market is expected to grow, driven by first-time homebuyers, said Kan. But he warned that challenges such as high prices, low inventory, and limited credit availability remain.
Mortgage lenders continue to face challenges with production losses and excess capacity.
On the servicing side, Walsh said that low delinquencies and prepayments have led to increased net operating income, but delinquency rates are expected to rise in 2024 due to increasing unemployment and financial stress among borrowers.
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