Forecast revised downward amid high interest rates and low housing affordability
iEmergent provides highly accurate mortgage industry forecasts, regularly outperforming other popular predictors. This year, however, iEmergent has revised its 2024-2026 U.S. Mortgage Origination Forecast to reflect ongoing economic conditions, predicting lower-than-anticipated growth for the next two years, particularly in the purchase mortgage market.
A Quick Look at the Numbers
Mark Watson, chief economist at iEmergent, predicts that purchase mortgage originations in 2024 will decrease compared to 2023 despite increased average loan sizes.
Credit unions and other lenders should focus on high-value loans to accommodate the difference and prepare for a huge rise in refinance business—according to Watson, an increase of 48% from their record low level of 2023—driven by the Fed’s recent rate drop and subsequent softening of mortgage interest rates.
iEmergent also forecasts a modest recovery to overall mortgage origination volumes by 2026, as housing affordability slowly improves. Watson credits this recovery to the surprising resilience of the U.S. economy post-COVID, bolstered by rapid government stimulus responses, the quick development and rollout of vaccines, innovative business adaptations to unusual working conditions, strong consumer spending, and unexpected labor market strength.
Gain deeper insight into the future growth of refi and originations by reading the full blog.
Methodology
For over 20 years, iEmergent has been delivering mortgage market predictions with precision, surpassing even the most trusted forecasts from the Mortgage Bankers Association, Freddie Mac, and Fannie Mae. In fact, iEmergent's U.S. Mortgage Origination Forecast has accurately predicted originations to within 10 loans in nearly 70% of the nation's 84,414 census tracts.
iEmergent’s proprietary forecasting method combines elements from several traditional demand models. Two key components drive these forecasts: the Purchase Mortgage Generation Rate (PMGR), which is the rate at which an individual market produces purchase mortgages; and the homebuyer pool, which is the number of households ready, willing, and able to buy a home. By analyzing the relationship between the homebuyer pool and PMGR in each census tract, probability can be applied to estimate the volume of purchase mortgage loans and dollars expected in that market.
Read more about iEmergent’s approach to forecasting here.