Wish lists are in fashion now with the holiday season just around the corner. For professionals in the mortgage industry, the ask for 2026 is more originations — as it was at the end of 2023 and this time last year, too.
The singular barrier to achieving higher production volumes is one the industry can hardly do anything to solve: affordability.
Economists at the Mortgage Bankers Association (MBA) announced at their annual conference last week that their forecasts show total mortgage production rising to $2.2 trillion on 5.4 million loans in 2026, a 7.6% increase by units from 2025.
“We expect that home sales will increase in 2026,” said Mike Fratantoni, chief economist and senior vice president for Research and Business Development at the MBA, boosted by a combination of lower mortgage rates and flat or declining home prices.
The MBA’s forecast is the second to recently point to worsening macroeconomic conditions as beneficial to mortgage industry production next year.
An origination forecast from iEmergent, a real estate market intelligence firm, cites spreading tariff impacts, waning consumer confidence and additional cooling in the labor market as drivers forecast to push total production to $2.27 trillion in 2026.
Aided by recent increases in refinance activity, both iEmergent and the MBA expect total annual originations in 2025 to hit or exceed $2 trillion for the first time since 2022.
Fratantoni said the MBA expects the job market to continue weakening in 2026 with the unemployment rate rising from its current level of around 4.3% to 4.7%.
Lenders and servicers should expect increased delinquency rates on government loans and pressure on servicing costs as a result, warned Marina Walsh, vice president of industry analysis at the MBA.
“U.S. homeowners have accumulated approximately $36 trillion in home equity, providing a financial cushion,” Walsh noted of the flexibility many borrowers enjoy should loss mitigation options like cash-out refinances or loan modifications become necessary.
Mortgage rates are unlikely to fall much lower than their current range of 6.25% and 6.5%, the MBA forecasts, citing federal budget deficits and elevated inflation expectations as putting upward pressure on 10-year Treasury yields, even as the Federal Reserve cuts short-term interest rates, leaving mortgage rates between 6% and 6.5%.
Instead, the MBA expects most affordability gains made in 2026 to be driven by softening home prices.
“The increase in inventories will put downward pressure on home prices across the country,” Fratantoni added. “Home-price declines nationally are expected to decline for several quarters over the next few years.”
Purchase originations are forecast by the MBA to increase 7.7% to $1.46 trillion in 2026, while refinance volumes are expected to increase 9.2% to $737 billion. Periods where mortgage rates decline will likely offer periodic refinance opportunities similar to the surge in refinance applications as rates fell in the weeks before the Fed’s September rate cut.
Overall, however, the purchase affordability matrix will likely remain as difficult for homebuyers to navigate in 2026 as it was in 2025, according to Joel Kan, deputy chief economist at the MBA.
“While median principal and interest payments are gradually declining, they are significantly higher than they were five years ago, given cumulative home-price appreciation and the current level of mortgage rates,” Kan said.
Since the beginning of 2020, property insurance costs have increased by an average of 70% compared to increases of 23% for principal, 27% for interest and 27% for property taxes, according to ICE Mortgage Technology.
“Additionally, the cost burdens from increasing taxes and homeowners’ insurance continue to pose challenges to both prospective homebuyers and existing homeowners,” Kan added.
