The Mortgage Bankers Association estimates a 4.2 percent increase in mortgage originations from 2018 to 2019. In addition to that, the refinance originations are expected to decrease by 12.4 percent to $395 billion. Overall, in 2019 there is predicted to be a significant decrease in mortgage originations from $1.64 trillion to $1.63 trillion. Setco is prepared to handle these changes with stride. These estimates allow us to be sure that we properly handle our client's closings to make it the best and easiest process of their lives.
The unemployment rate is at the lowest it has been in 50 years, wage growth is quicker, and home buyers are more confident than ever. 30-year mortgage rates are expected to rise modestly from here on out, while the Federal Reserve is also expected to increase short-term rates further. Although there has been a deceleration in the rate of home price growth, the pause will allow income growth to catch up to recent home values. Housing demand is expected to continue growing, especially with millennial buyers beginning to hit the market.
Setco’s ability to aid our clients with the closing process is only further strengthened by the ever-changing factors of the real estate market. The mortgage industry continues to be challenged by the drop in origination volume, but the macroeconomic and housing backdrops are positive. Lenders are seeing more elevated costs, while pricing continues to be competitive, which is depressing revenues. With short-term rates going up, it is becoming more and more difficult to justify certain mortgages.
The Mortgage Bankers Association expects the Fed to raise the federal funds rate in December, and in addition to that, three more times in 2019. This will bring the fed funds target to 3 percent. 30-year mortgage rates are expected to level out at 5.1 percent, but only time will tell. The unemployment rate is also expected to decrease by 3.5 percent by the end of 2019, which should help keep housing demand at a healthy level.
Read more in the MBA's updated Mortgage Finance Forecast.