The Mortgage Bankers Association’s latest monthly forecast provided a mixed bag of changes to the past and present mortgage originations, but made only small changes to the future.
The biggest change was to the past. It being August, the MBA made annual revisions to last year’s numbers based on Home Mortgage Disclosure Act (HMDA) data. It rolled back total originations by 5.3% by raising its estimate for purchases by 3.9% and lowering the smaller value of refinances by 29%.
For the first half, it revised purchases up by 2.4%, while lowering refinances by 6.5%. The net revision was 0.6% dial-back for total originations. The net revisions for total originations were mostly in the current third quarter, and very little to the fourth quarter. No changes were made to the value of originations in 2026 or 2027.
With changes to both the past and present in different degrees, percentage changes in originations get very screwy. The MBA's July 17 forecast said second-half purchases would rise 8.6%, while refinances would rise 19%.
The Aug. 20 forecast called for purchases to rise 7% to $735 billion in the second half, because the bigger upward revision to the past made the step to the present shorter.
Refinances are now expected to rise 57% to $346 billion in the second half because the revision pushed 2024’s second half down much further than this year’s, making the climb much steeper.
Total originations are expected to rise 19% to $1.08 trillion for the second half — the first time volume topped $1 trillion since the first half of 2021.
For the year, total purchases are expected to rise 20% to $2.02 trillion. Purchases are expected to rise 2.7% to $1.37 trillion, while refinances are expected to rise 84% to $640 billion.
Last year, the MBA’s Aug. 20 forecast showed total originations rose 16% to $1.69 trillion. The July 17 forecast had estimated total originations rose 22% to $1.78 trillion.
By comparison, NCUA data showed credit unions originated $111.7 billion in first mortgages in 2024, up 6.7% from 2023.
Besides mortgages, the Aug. 20 forecast was brighter on economic growth, raising its estimate for gross domestic product (GDP) to rise 1.0% this year, up from its July 17 forecast of 0.5% growth.
It expects 30-year interest rates to fall to 6.6% by year's end, slightly lower than the 6.7% in the July 17 forecast.
Meanwhile, on Thursday the National Association of Realtors reported existing homes sold in July at a seasonally adjusted annual rate of 4.01 million, up 2.0% from June and up 0.8% from a year earlier.
Half of homes sold for $422,400 or more, up 0.2% from the median price a year earlier.
NAR Chief Economist Lawrence Yun said the near-zero growth in home prices suggests that roughly half the country is experiencing price reductions.
“The ever-so-slight improvement in housing affordability is inching up home sales,” Yun said. “Wage growth is now comfortably outpacing home price growth, and buyers have more choices. Condominium sales increased in the South region, where prices had been falling for the past year.”
Yun said most homeowners are doing well financially. Only 2% of sales were foreclosures — “essentially a historic low,” while home prices have appreciated 49% for a typical American homeowner from pre-COVID July 2019 to July this year.
“Homebuyers are in the best position in more than five years to find the right home and negotiate for a better price,” he said. “Current inventory is at its highest since May 2020, during the COVID lockdown.”
Contact Jim DuPlessis at JDuPlessis@cutimes.com.
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