The Mortgage Bankers Association forecasts $1.2 trillion in mortgage originations during 2014, a 32 percent decline from 2013. Here’s a look at more key stats projected for 2014.
- Originations: Purchase originations are projected to increase to $723 billion in 2014, up from $661 billion in 2013. In contrast, refinances are expected to drop to $463 billion, which will result in total originations of around $1.2 billion. For 2015, MBA is forecasting purchase originations of $796 billion and refinance originations of $433 billion as total volume holds steady. The MBA expects 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.
- Mortgage Rates: The MBA estimates 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. The market will potentially see a small increase in refinances toward the end of 2015 as the Home Affordable Refinance Program 2.0 expires.
- Existing Home Sales: Sales are forecasted to hold fairly even with 2013— which should finish around 5.13 million—at about 5.12 million in 2014. The average median existing-home price is projected to be about $209,000, up 6 percent from 2013 year-end estimates.
- New Home Sales: Likely to grow to 508,000 in 2014, housing starts are forecast to reach 1.13 million in 2014 compared to an estimated 917,000 in 2013.
- Real GDP: Growth will remain relatively weak through early 2014, at around 2 percent, due to a variety of uncertainties, particularly over U.S. spending and tax policies linked to the debt limit debate. The MBA expects the economy will grow somewhat faster in the second half of 2014 as some of these issues are resolved.
- 10-Year Treasury Rate: The 10-year Treasury rate is expected to stay below 3 percent 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). The MBA expects 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.
- Unemployment: The unemployment rate 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. The MBA expects the unemployment rate will decrease to 6.9 percent in 2014 and 6.5 in 2015.
Source: Mortgage Bankers Association, National Association of Realtors and American Land Title Association.