Posted: December 12th, 2023
Hello!
“Mortgage originations are increasing as interest rates drop as a result of the recession, excellent news for prospective homeowners as we start a new year!”
The Mortgage Bankers Association (MBA) recently released a housing market forecast, predicting a surge in mortgage originations for 2024. According to the MBA, mortgage originations are estimated to reach 5.2 million loans next year, marking a significant 19% increase from the predicted 4.4 million loans for 2023. In terms of volume, we can expect a jump from $1.64 trillion this year to $1.94 trillion in 2024.
This rise in originations can be attributed to a drop in mortgage rates. Currently, rates have reached unprecedented heights, with the 30-year fixed rate exceeding 7%. However, the MBA predicts that a mild recession, coupled with tight Federal Reserve policies, deteriorating credit conditions, and decreasing US savings, will drive rates down.
As job market growth slows and unemployment rises, inflation is expected to gradually fall to the Fed's target rate of 2% by mid-2025. With these conditions in place, the central bank will have the opportunity to lower interest rates, subsequently reducing mortgage levels. Lower rates will not only stimulate homebuyer demand but also contribute to the inventory of existing homes. This, in turn, will support increased originations in 2024.
As homeowners take advantage of favorable rates, more properties will become available on the market, addressing the current shortage. However, despite these positive developments, housing inventory will remain tight over the next few years. Homebuyers should anticipate high payments, limited available properties, and reduced credit availability.
In conclusion, the upcoming year holds promise for prospective homebuyers. With expected rate drops and increased mortgage originations, now might be an opportune time to explore your homeownership options.
Warm regards,
Darrell Teddick
Your Mohawk Mortgage Man