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It seems like forecasting the level of new loan mortgage originations is getting like forecasting the weather. There are a number of pretty good indicators. But, things keep changing which makes it difficult to get it just right.
Initially, the outlook was for rising interest rates, declining refi’s, and a bullish new purchase market. Fannie had predicted that 2017 would see about $1.104 trillion for new purchase business. Due to a slight disturbance in the atmosphere, it now forecasts a decrease to about $1.081.
However, refi’s which were projected to decline were forecasted to be about $496 billion. That is now predicted to be a little higher at about $501 billion.
Overall, the forecast for 2017 is now about the same as originally predicted. But, the breakdown is slightly adjusted. Still a little cloudy…
Even with rates remaining relatively low, purchase volumes declined in the last week or so. However, the refi pick up was nowhere near a pace that would offset the declines from last year’s volumes. A refi drought is still the forecast.
The good news is that according to Mike Fratantoni, Chief Economists at Fannie Mae, skies may be clearing for the remainder of the year.
Due to signs of a strong job market and continued economic growth, Fannie forecasts a 9% growth in 2017 purchase activity over that of 2016. Bring on the sunshine.
- Are you prepared for whatever comes your way?
- Do you have the right clothing (products) and a good umbrella (plan) in the event of a change in the weather?
It’s tough to get an exact prediction of rates and loan volumes in light of the all the things that may affect our economy, the markets, and the rates.
Lenders need to be prepared for whatever comes their way. That takes planning, products, training, and technology. Look for ways to streamline operations to tie origination expenses to origination volumes.
Don’t get caught by a sudden change in the weather. Check the forecasts but be prepared for whatever may come; good or bad.
