The total mortgage origination volume in the U.S. is expected to increase to $2.3 trillion in 2025 from the $1.79 trillion expected in 2024, the Mortgage Bankers Association (MBA) announced over the weekend at its 2024 Annual Convention & Expo in Denver. That’s a 28.5% increase in total volume.
Purchase originations are forecast to increase 13% to $1.46 trillion next year. By loan count, total mortgage origination volume is expected to increase by 28% to 6.5 million loans in 2025 from the 5.1 million loans expected in 2024.
The MBA expects interest rates to fall within a narrow range of 6% for the foreseeable future after the first rate cut in September and future rate cuts already baked in, said Mike Fratantoni, the MBA’s chief economist in a statement.
“We are bullish about the spring 2025 housing market,” Fratantoni said. “Mortgage rates at this level should support homebuyer demand and gradually reduce the lock-in effect, thereby increasing the inventory of existing homes and supporting higher purchase origination volume in 2025.”
One area of concern: Fratantoni expects that the job market will likely slow with fewer jobs added. He said the MBA expects the unemployment rate will rise from 4.1% to 4.7% by the end of 2025. And inflation will gradually decline toward the Federal Reserves 2% goal at the end of next year, Fratantoni forcecast.
There has been a growth in purchase applications for both new and existing homes, said Joel Kan, the MBA’s deputy chief economist, in the statement. Demographics would continue to support housing demand, as younger age cohorts are either in or entering prime homeownership ages.
Affordability challenges remain, as median purchase mortgage payments are still elevated and emerging cost burdens from rising homeowners’ insurance premiums and rising property taxes are adding to the cost of homeownership.
“Mortgage rates are lower than they were a year ago, and for-sale inventory has started to grow somewhat, which is helping to ease price pressures in many markets. It is also encouraging that an increasing share of first-time homebuyers have turned to newly built homes as an option, given the lack of previously owned starter homes on the market.
“These factors should support a bigger gain in purchase activity early next year, especially if mortgage rates remain near these levels or decline further,” Kan said.
MBA’s new Mortgage Finance Forecast and Economic Forecast can be viewed here.
