theMReport.com Your trusted source for mortgage banking news
""Keefe, Bruyette & Woods (KBW),"":http://www.kbw.com/ a boutique investment bank and broker-dealer, is predicting ""more of the same"" for the mortgage market in the New Year.
[IMAGE]KBW anticipates a decline in mortgage originations in 2013. However, the firm maintains originations will ""remain strong"" in the New Year.
After totaling about $1.7 trillion this year, KBW suggests originations will reach about $1.54 trillion next year. This is close to the estimate put forth by the ""Mortgage Bankers Association"":http://www.mbaa.org/default.htm --$1.5 trillion--and not far from ""Fannie Mae's"":http://www.fanniemae.com/portal/index.html expectation of $1.3 trillion.
[COLUMN_BREAK]About $150 billion of KBW's total estimated $1.7 trillion will be refinances through HARP 2.0, KBW suggests.
The ""Federal Reserve's"":http://www.federalreserve.gov/ QE3 policy of purchasing mortgage-backed securities (MBS) will likely keep mortgage rates low, encouraging refinances, and changes to HARP will make the program accessible to more homeowners.
Continuing the ""more of the same"" theme, KBW predicts prepayment speed will remain essentially unchanged between 25 and 30 percent.
However, mortgage investment returns will contract, according to KBW, which ""will result in a challenging investment environment for the mortgage REITs, especially so for the Agency MBS REITs.""
Additionally, mortgage credit costs will continue to be impacted by rep and warranty expenses imposed by Fannie Mae and Freddie Mac, according to KBW's predictions.
As lawmakers continue to deliberate mortgage regulation, KBW says, ""We do not expect major market reform through Congress in 2013, but we expect FHFA to continue to make changes at the regulatory level, including raising guarantee fees.""
