The Mortgage Bankers Association cut its forecast for originations sharply for the second quarter as rising oil prices also caused mortgage rates to rise.
A month ago the MBA raised its forecast as rates seemed to be falling faster than it expected – below 6% for a 30-year fixed-rate mortgage.
But that all changed after the United States and Israel launched a war on Iran Feb. 28. Since then oil prices have soared, mortgage rates have risen and applications have fallen sharply in the two weeks ending March 20.
The MBA's March 23 forecast only made changes in its originations forecasts for the second through fourth quarters of this year, with the bulk consisting of a large downward revision for purchases in the second quarter.
On Wednesday the MBA announced that the number of mortgage applications for the week ending March 20 were 10.5% lower than the previous week, as refinances fell 15% and purchases fell 5%. It followed a 10.9% drop for the week ending March 13, as refinances fell 19% and seasonally adjusted purchases fell 1%.
Joel Kan, the MBA's deputy chief economist, said the 30-year fixed rate rose to 6.43% by March 20, more than 30 basis points higher than at the end of February and at its highest level since October 2025.
"The threat of higher for longer oil prices continued to keep Treasury yields elevated, and mortgage rates finished last week higher," Kan said.
"Given this period of increasing mortgage rates and diminishing refinance incentives, refinance applications decreased 15% as applications across all loan types declined," he said. "Purchase applications were also down last week, as higher mortgage rates, coupled with affordability constraints and economic uncertainty, pushed some potential homebuyers to the sidelines."
The MBA's March 23 forecast lowered its estimate for second-quarter purchase originations by 7% to $359 billion. The revised amount is 2.2% lower than a year earlier.
Purchase originations for the second half was lowered by 1.5% to $727 billion. The revised amount is 1.4% higher than a year earlier.
Refinance originations for the second half was lowered by 2% to $343 billion. The revised amount is 21% lower than a year earlier.
Contact Jim DuPlessis at Jim.DuPlessis@arc-network.com.
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