MBA Puts Out 2014 Projections, Predicts 32% Drop in Originations

Next year's mortgage numbers are on track to fall off by nearly a third as the decline in refinances outpaces the slow growth of purchase originations, according to a forecast released Tuesday by the ""Mortgage Bankers Association"":http://mba.org/default.htm (MBA).

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MBA said it expects mortgage originations to total $1.2 trillion through 2014, a 32 percent decline from 2013's estimate, which was upwardly revised to $1.7 trillion based on Home Mortgage Disclosure Act (HMDA) data released in September.

While purchase loan volume is projected to rise 9 percent to $723 billion next year, MBA predicts refinances will plummet 57 percent to $463 billion.

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Those trends are expected to continue into 2015, with purchase loans totaling $796 billion and refinances falling further to $433 billion--resulting in a slight overall increase in origination volume from 2014 to 2015.

""We expect mortgage rates will increase above 5 percent in 2014 and then increase further to 5.3 percent by the end of 2015,"" said Jay Brinkmann, chief economist and SVP for the association. ""As a result, mortgage refinancing will continue to drop, and borrowers seeking to tap the equity in their homes will be more likely to rely on home equity seconds rather than cash-out refinances.""

While refinance activity may see a slight boost toward the end of 2015 as the Home Affordable Refinance Program (HARP) approaches its expiration date, Brinkmann says many borrowers who have not yet participated in the program are unlikely to do so with interest rates now on the rise.

On the topic of overall economic performance, MBA projects GDP growth of 2.4 percent in 2014 and 2.7 percent in 2015, ""supported mainly by increases in consumer spending and residential fixed investment,"" Brinkmann said. Growth is expected to remain slow through the end of 2013 and early 2014 before accelerating in next year's second half as the government works out spending and tax policies linked to the debt ceiling debate.