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MBA: Home-purchase market looks bright

Challenging times for mortgage companies are expected to continue next year, but the news is not all bad.

The outlook for home-purchase loans, now the industry’s mainline source of business, looks solid in 2019 and beyond, Mortgage Bankers Association (MBA) analysts said this week at the annual convention in Washington, D.C.


MBA projects that home-purchase loan volume will hit $1.24 trillion in 2019, up 4.2 percent compared to the projected figure of $1.19 trillion for volume this year. MBA also forecasts that purchase originations will rise to $1.27 trillion in 2020.

Purchase originations should also increase in 2021 and beyond as the wave of millennial-age homebuyers acquires homes for the first time, MBA projects.

Refinance volume, however, is expected to fall for the third straight year next year, clocking in at $395 billion, down 12.4 percent compared to the 2018 of $451 billion, MBA projects.

The overall origination volume, which includes home-purchase and refinance loans, is also expected to decline slightly in 2019, to $1.63 trillion, down from the projected $1.64 trillion in 2018, the trade group said.

MBA Chief Economist Mike Fratantoni said that demand for homes should continue to be supported by a strong economy and an unemployment rate that is near a record low. Also helping the situation is that home-price growth has decelerated nationally. Some overheated California markets are showing signs of cooling off.

“This is still a tight market,” Fratantoni told reporters during the MBA convention this week. “We are not going to see home prices dropping. It is going to be less frothy, less overheated and that is generally positive,” he said.

The shift away from a refinance-dominated market to a purchase-loan market has been rocky for some companies, though.

“Profitability is down,” said Marina Walsh, MBA’s vice president of industry analysis. Nonbank mortgage companies had an average net loss on loan originations in the first quarter, and the second quarter’s margins were the lowest for that quarter since MBA began surveying in 2008.

“It is just more difficult times for sure,” she said. 


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