The Mortgage Bankers Association revised upwards its forecast for mortgage refinances for the first quarter as interest rates have fallen.
But, oddly, MBA's Jan. 21 forecast revised downward its first-quarter forecast for originations of mortgages to buy a home, despite other signs, many from the MBA, that those are picking up steam as well.
The result was that the refi and purchase trends canceled each other out. The MBA's Jan. 21 forecast showed total originations for the Q1 2026 was revised downward by a mere 0.5% to $543 billion. The revised amount was 41% higher than a year earlier.
Refinance originations for the first quarter was revised upwards 7.4% to $219 billion. The revised amount was 95% higher than a year earlier.
Purchase originations for the first quarter was revised downward 5.3% to $324 billion. The revised amount was 19% higher than a year earlier.
This month's forecast included an unusually large downward revision for mortgage rates.
The MBA's previous forecast was released earlier in the month than usual: Dec. 12, and it made no changes to mortgage origination forecasts or the rate for 30-year, fixed rate mortgages.
"Mortgage rates have inched higher over the past week, slowing the pace of refinance applications at a time of year when the purchase market typically slows sharply," MBA economists wrote in a Dec. 17 commentary. "Our forecast is for mortgage rates to stay within a narrow range over the next few years, between 6% and 6.5%. This forecast becomes more likely as the Fed reaches the end of their cutting cycle next year."
Instead, rates moved down in late December. They fell further after President Trump tweeted Jan. 8 that he had told Fannie Mae and Freddie Mac to buy $200 billion in mortgage-backed securities to "drive mortgage rates down."
In the Jan. 21 forecast, the MBA revised the mortgage rate for Dec. 31 to 6.2%, down from the 6.3% it had been forecasting as recently as Dec. 12.
The Jan. 21 forecast showed rates falling further to 6.1% by March 31, down from its Dec. 12 forecast of 6.4%.
In its commentary posted Jan. 23, the MBA said the downward pressure from the purchases of mortgage-backed securities might be short-lived, in part because the purchases by the government-sponsored enterprises might be countered by increased sales by private investors.
"This initial reaction to the announcement regarding MBS purchases may overstate the longer-run impact," the MBA wrote. "We continue to expect that mortgage rates will remain in the range of 6% to 6.5% in 2026."
The MBA said the recent drop in rates "prompted significant increases in refinance activity over the past two weeks."
But the commentary didn't address the strong upward movement the MBA has also reported for purchase mortgage applications for the first two weeks of January.
The National Association of Realtors (NAR) reported Jan. 15 that existing home sales in December rose 5.1% from November — the strongest seasonally adjusted monthly gain in nearly three years.
NAR Chief Economist Lawrence Yun said most of 2025 had historically low home sales.
"However, in the fourth quarter, conditions began improving, with lower mortgage rates and slower home price growth," Yun said. "The gains were broad-based, with all four major regions improving from the prior month."
On Nov. 14, Yun released a forecast that existing home sales would rise 14% in 2026, reflecting easing mortgage rates, continued job gains and improving market stability.
He said mortgage rates would fall "modestly" to around 6% in 2026, improving affordability.
Contact Jim DuPlessis at Jim.DuPlessis@arc-network.com.
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