|Title: ||MBA Sees 2014 Originations Falling 32 Percent from 2013|
Washington, DC (October 29, 2013) - The Mortgage Bankers Association (MBA) announced today that it expects to see $1.2 trillion in mortgage originations during
2014, a 32 percent decline from 2013. While MBA expects purchase originations to increase 9 percent, it expects refinance
originations to fall 57 percent.
MBA also upwardly revised its estimate of originations for 2013 to $1.7 trillion from $1.6 trillion to reflect shifts in lender
market shares reported in the latest Home Mortgage Disclosure Act (HMDA) data release.
MBA expects that purchase originations will increase to $723 billion in 2014, up from $661 billion in 2013. In contrast, refinances
are expected to drop to $463 billion from $1.08 trillion in 2013.
For 2015, MBA is forecasting purchase originations of $796 billion and refinance originations of $433 billion for a total
of $1.2 trillion. Jay Brinkmann, MBA’s Chief Economist and Senior Vice President for Research and Education released the
following statement highlighting key points of the forecast:
“We are projecting home purchase originations will increase in 2014 due largely to gains in home sales and home prices. We
expect to see a decline in the share of sales paid for with cash, and higher average LTVs on purchase mortgages, due to the
rise in home prices.
“We expect mortgage rates will increase above 5 percent in 2014 and then increase further to 5.5 percent by the end of 2015.
As a result, mortgage refinancing will continue to drop, and borrowers seeking to tap the equity in their homes will be more
likely to rely on home equity seconds rather than cash-out refinances. We will potentially see a small increase in refinances
toward the end of 2015 as the Home Affordable Refinance Program 2.0 (HARP) expires but HARP activity during 2014 will still
be low. While on paper the number of HARP-eligible borrowers appears large, the reality is these borrowers have been unresponsive
to numerous attempts to encourage them to participate in the program and are less likely to do so now that rates have gone
“We revised our origination estimates for 2012 and 2013 based on the 2012 HMDA data released in September 2013. The data
showed a higher share of originations going to independent mortgage lenders, particularly purchase mortgages. In 2012, 40
percent of the purchase volume was originated by independent mortgage companies, up from 36 percent in 2011.
“Our forecast for the increase in the purchase market is based on our expectations for ongoing improvements in the broader
economy and the jobs market. We are projecting overall economic growth to be 2.4 percent in 2014 and 2.7 in 2015, supported
mainly by increases in consumer spending and residential fixed investment. GDP growth will remain relatively weak through
the end of 2013 and early 2014, at around 2 percent, due to a variety of uncertainties, particularly over US spending and
tax policies linked to the debt limit debate. Our expectation is that the economy will grow somewhat faster in the second
half of 2014 as some of these issues are resolved.
“The 10-Year Treasury rate is expected to stay below 3 percent for the remainder of 2013 and into early 2014, but then increase
more rapidly in the second half of 2014 as the Fed tapers its asset purchases and subsequently phases out the third round
of quantitative easing (QE3). We now expect the Fed to begin tapering its asset purchases in early 2014, and ending QE3 in
September 2014. The Fed funds rate will be kept near zero until mid 2015, when we expect to see the first fed funds rate increase.
“Unemployment is expected to continue on a downward path due to falling labor force participation and job growth in the range
of 150,000 to 170,000 jobs per month. We expect the unemployment rate will decrease to 6.9 percent in 2014 and 6.5 in 2015.”
The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry
that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the
association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand
homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and
fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety
of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies,
mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending
field. For additional information, visit MBA's Web site: www.mba.org.