WASHINGTON–Total mortgage origination volume is expected to increase to $1.95 trillion in 2024 from the $1.64 trillion expected in 2023, according to a new forecast from the Mortgage Bankers Association (MBA).
In addition, the MBA is predicting loan count, or the total volume of mortgage origination, will increase by 19% to 5.2 million loans in 2024, up from 4.4 million loans expected in 2023.
The MBA added it expects purchase originations will increase 11% to $1.47 trillion in 2024.
“Both fiscal and monetary policies have contributed to the much higher level of mortgage rates in 2023,” Mike Fratantoni, chief economist and senior vice president for research and industry technology at MBA, said in a statement. “The Fed’s hiking cycle is likely nearing an end, but while Fed officials have indicated that additional rate hikes might not be needed, rate cuts may not come as soon or proceed as rapidly as previously expected. Lower rates should help boost both homebuyer demand and increase the inventory of existing homes, thereby supporting purchase origination volume in 2024.”
Fratantoni further forecast that the job market will likely slow some in 2024, with the unemployment rate rising to around 5%, which has been a goal of the Fed as it has raised rates and sought to cool inflation. Fratantoni believes inflation will hit the Fed’s 2% target by mid-2025.
All of that should also help bring down mortgage rates, according to Fratantoni, with the MBA forecasting mortgage rates will stand at 6.1% at year-end 2024 and will decline to 5.5% by year-end 2025.
The Mortgage Bankers Association is also predicting national home prices will continue to grow over the next three years, as tight inventory supports price growth. The MBA expects first-time homebuyers to account for a large portion of housing demand over the next few years, as this largest age cohort entering its prime homeownership ages.