Morning Report: The MBA forecasts $3.2 trillion in origination this year

Vital Statistics:


  Last Change
S&P futures 3425 -6.6
Oil (WTI) 40.35 -0.29
10 year government bond yield   0.82%
30 year fixed rate mortgage   2.89%

Stocks are flattish this morning as earnings continue to pile in. Bonds and MBS are flat.


Initial Jobless Claims fell to 787k last week. We are still a long way from normalcy here.


Amerihome has filed to go public, the latest in a wave of mortgage bankers. That makes Rocket, United Wholesale, Guild, Amerihome, and Caliber. Am I missing anyone? If you were Bank of America, would you resurrect the Countrywide brand and spin it off?


The MBA forecasts that originations will increase to $3.2 trillion this year, and then slowing to $2.5 trillion next year. They see purchase originations hitting $1.5 trillion this year, however they see refinance activity falling to under $1 trillion next year as they forecast the 30 year mortgage rate hitting 3% by the end of the year and rising to 3.3% by the end of 2021. That said, if Black Knight’s numbers are correct – that there are 32 million homes that could save 75 basis points in rate by refinancing – then the refi boom should last as long as rates stay in this neighborhood. Don’t forget, the Fed is actively buying MBS in order to hold down rates. I don’t see that changing. The other wild card is homebuilding. Demand is insatiable for homes right now, and the builders will probably be snapping up undeveloped land in the exurbs all winter. Working from home has changed the entire calculus about living in the exurbs. Bidding wars for starter homes are common these days.


Financial firms are preparing for a Biden Administration, which will mean a return to the Richard Cordray days of “regulation by enforcement action.” This basically means that the agency wouldn’t tell anyone what the rules were; the only way to figure out what they were thinking was from reading an enforcement action after the fact. This would be like driving on a road with no speed limit signs, and the only way to find out the speed limit would be to get a ticket.


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