2014 Mortgage Forecast Dropped by $57 Billion

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Declining mortgage application activity and increasing interest rates in the U.S. has led to a lowered forecast for mortgage originations in 2014.

The Mortgage Bankers Association has lowered the forecast by $57 billion to $1.12 trillion for this year, according to a recent report. 

"Despite an economic outlook of steady growth and a recovering job market, mortgage applications have been decreasing - likely due to a combination of rising rates and regulatory implementation, specifically the new Qualified Mortgage Rule," said Mike Fratantoni, chief economist for MBA. "As a result, we have lowered our expectations for both purchase and refinance originations in the first half of 2014."

Purchase applications are now expected to be $677 billion for 2014, lower than the previous forecast of $711 billion. Purchase originations in 2014 are expected to be 3.8 percent higher than 2013, according to the MBA. 

Yesterday, the MBA announced an 11 percent decrease in mortgage applications for new homes for December, relative to the previous month. According to Freddie Mac, mortgage rates fell to 4.41 percent this week. 

The forecast for refinance originations in 2014 was lowered as well and are now expected to be $440 billion, compared to a previous forecast of $463 billion. The updated refinance total is approximately 60 percent lower than 2013 refinance originations.