It is B-U-S-Y right now. We’re looking at the best year for total home sales in ten years and Q3 of 2016 will be the biggest refinance quarter in three years. Not a bad combo there.
A year ago, nearly all economists were projecting 2016 to be a slightly down year for mortgages from 2015, which saw the industry collectively originate $1.75 trillion. The quicker start to the year led to increased 2016 projections of between $1.65T-$1.8T. Then, earlier this week, Freddie Mac came out and formally predicted what many have been thinking - that the industry will originate over $2 trillion in 2016. Freddie Mac’s Chief Economist Sean Becketti will be in attendance and speaking at our Summer Conference that starts this Sunday, so we’ll all get a chance to hear his thoughts on all of this - and to interact with him over the course of a few days.
This is significant news for a few reasons. First and foremost, the boost to business comes at a good time for lenders. The cost to originate a mortgage is significantly higher than its ever been, which has eroded profit margins. And many lenders are investing in technology and growth right now - which is not cheap.
Also - we’re now looking at a 20-25% increase in business in 2016 over 2015. Great news to be sure, but even better news when a down year was expected.
According to MBA’s official origination totals - if 2016 originations exceed $2.04T (they will), then 2016 will be the biggest year for mortgage originations since 2007, the year that the sub-prime mortgage crisis threw our industry and the American economy into turmoil.
TMC - Chief Operating Officer