MBA Economic and Mortgage Finance Outlook
Prepared for NCSHA Annual ConferenceSeptember 29, 2015
Mike FratantoniChief Economist
MBA
MBA Economic Outlook
Source: MBA Forecast – September 2015
2014 2015 2016
GDP Growth 2.5% 2.4% 2.4%
Inflation 1.6% 0.2% 2.1%
Unemployment 6.2% 5.3% 4.8%
Fed Funds 0.125% 0.375% 1.375%
10-year Treasury 2.5% 2.2% 2.9%
30-year Mortgage 4.2% 3.9% 4.8%
Refi originations ($ B) 484 590 379
Purchase originations ($B) 638 801 885
New home sales (thousand) 440 520 569
Existing home sales (thousand) 4,920 5,265 5,464
Job Growth Showing Sustained Strength
Source: BLS
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2015
- Fe
b
2015
- Apr
2015
- Ju
ne
2015
- Aug
(500)
(400)
(300)
(200)
(100)
-
100
200
300
400 321
180 235
284 254 265
162
(145)
(42)
9
169 209
174
95
(298)
(424)
89
173 188 199
260
201
266
119
187
260 245 245
173
Average Monthly Payroll GrowthSeasonally adjusted, 000s of jobs
2015 YTD Avg = 212,000 jobs/mth
More Wage Growth in the Works?
Source: BLS
But Compensation Growth Not Picking Up Yet
Source: BLS
Source: BLS
Difference in Headline vs Core Inflation
(3.0)
(2.0)
(1.0)
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
1.8
0.2
Inflation TrendsYear over year percent change
All Items exc Food & Energy All Items
Rates Expected to Increase
Source: BEA, MBA Forecast
Refinance Activity Slowing Down
Source: MBA Weekly Applications Survey
Home Sales and Interest Rates
Source: Census, Federal Reserve, MBA, NAR
Jan.2000 Apr.2001 Jul.2002 Oct.2003 Jan.2005 Apr.2006 Jul.2007 Oct.2008 Jan.2010 Apr.2011 Jul.2012 Oct.2013 Jan.20150.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Chart of the Week - September 18, 2015Rates and Home Sales
10-Year Treasury Yield (%) Fed Funds Target Rate (EOP, %) Total Home Sales
Percent SAAR # of units
Three Tectonic Trends Affecting U.S. Housing Markets
- Demographics
- Long-term Societal Trends
- Hang-over from the Great Recession
Source: Census
Household Growth Predominantly Renters
More Young and Old, Fewer Middle-Aged
Source: Census
18-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-70 70-75 75-80 80+-4000000
-3000000
-2000000
-1000000
0
1000000
2000000
3000000
4000000
5000000
6000000 Projected Changes in Population, by Age 2014 - 2024
Non-Hisp. White Black Asian Other Hispanic
Growing Older
Sources: Census and MBA
18-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-70 70-75 75-80 80+0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
0%
10%
20%
30%
40%
50%
60%
70%
80%Projected Changes in Hispanic Population, by Age 2014 - 2024
Change in Hispanic Population (left axis) 2014 Homeownership Rate (right axis)
HOUSEHOLD DEMAND:Changing Demographics and Economy Plus Trends
Source: Census and MBA
18-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-70 70-75 75-80 80+-3000000
-2000000
-1000000
0
1000000
2000000
3000000
4000000
Projected Changes in Households, by Age 2014-2024
Non-Hisp. White Black Asian Other Hispanic
Using ForecastedHeadship Rates
HOMEOWNERSHIP DEMAND I: The Status Quo
Source: Census and MBA
18-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-70 70-75 75-80 80+-2000000
-1500000
-1000000
-500000
0
500000
1000000
1500000
2000000
2500000
3000000
Projected Changes in Owner-Occupier Housholds, by Age 2014-2024
Non-Hisp. White Black Asian Other Hispanic
Using 2014 Homeownership Rates and Forecasted Headship Rates
HOMEOWNERSHIP DEMAND II: Reversion to Long Run Average Homeownership Rates
Source: Census and MBA
18-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-70 70-75 75-80 80+-2000000
-1500000
-1000000
-500000
0
500000
1000000
1500000
2000000
2500000
3000000
Projected Changes in Owner-Occupier Households by Age, 2014-2024
Non-Hisp. White Black Asian Other Hispanic
Forecasted HS Rate and Avg Homeownership Rates
Large but Falling Multifamily Shares
Source: Census and MBA
1994 2004 2014 1994 2004 2014 1994 2004 2014 1994 2004 2014Age 25-34 Age 35-44 Age 45-54 Age 55+
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0.246702343225479
0.421342551708221 0.4680825471878050.527878224849701
0.185947626829147
0.1461902856826780.126362711191177
0.101124435663223
0.0301283393055201
0.04466680437326430.0535693131387234
0.0606332644820213
0.537221729755402
0.387800306081772 0.351985454559326 0.310364127159119
30%
45%53%
59%
19%
13%
11%8%
4%
5%
6%7%
47%37%
29% 25%
0.2624579966068270.384799718856812
0.502175331115723 0.540792584419251
0.249651536345482
0.227524474263191
0.152707517147064 0.1110865250229840.0357583910226822
0.05242579430341720.0613838881254196 0.0816139355301857
0.4521320760250090.335250020027161 0.283733308315277 0.266506999731064
Hispanic Structure/Tenure Share
SF Own SF Rent MF Own MF Rent
Home Prices Within Two Percent of 2007 Peak
Jun-2003 Jun-2004 Jun-2005 Jun-2006 Jun-2007 Jun-2008 Jun-2009 Jun-2010 Jun-2011 Jun-2012 Jun-2013 Jun-2014160
170
180
190
200
210
220
230
240
April 2006May 2015May 2007
FHFA US Purchase-Only House Price Index (SA)
-1.8%
Index
Source: FHFA
Turnover Returning to Early 2000 Rates
Source: NAR, Census, MBA
Jan.2000 Apr.2001 Jul.2002 Oct.2003 Jan.2005 Apr.2006 Jul.2007 Oct.2008 Jan.2010 Apr.2011 Jul.2012 Oct.2013 Jan.20153000
4000
5000
6000
7000
8000
9000
Total Home Sales
Modest Moves in Credit Availability
Source: Mortgage Bankers Association; Powered by AllRegs Market Clarity
Jun-
04
Jan-
05
Aug-
05
Mar
-06
Oct-0
6
May
-07
Dec-0
7
Jul-0
8
Feb-
09
Sep-
09
Apr-1
0
Nov-1
0
Jun-
11
Jan-
12
Aug-
12
Mar
-13
Oct-1
3
May
-14
Dec-1
40
100
200
300
400
500
600
700
800
900
1000
Credit Availability In Historical Context
Source: ALLREGS, MBA
3/2011 through present (rescaled)
95
100
105
110
115
120
125
Differentiated Purchase Application Market
Source: MBA Monthly Profile of Mortgage Activity
Differentiated Growth in Purchase Market
Jan-
14
Feb-
14
Mar
-14
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-1
4
Sep-
14
Oct-1
4
Nov-1
4
Dec-1
4
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
May
-15
Jun-
15
Jul-1
5-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
Purchase Application Trends, by Loan SizeYear year percent change in number of loans
<=$150K >$150K and <=$300K>$300K and <=$417k >$417K and <= $625k
Estimated Originations 1990 to 2016
Source: MBA Forecast – September 2015
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 -
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1,139
2,243
2,854
3,812
2,773
3,027
2,726
2,306
1,509
1,995
1,572 1,436
2,044 1,845
1,122
1,391 1,264
Mortgage Originations History and Forecast
Total Refi Purchase
$Billions
Performance Continues To Improve in Q2 2015
Source: MBA National Delinquency Survey
0.00
2.00
4.00
6.00
8.00
10.00
12.00
Perc
ent
Mortgage Delinquency RatesSeasonally adjusted, excludes loans in foreclosure
30 Days Delq 60 Days Delq 90+ Days Delq
10.06
4.465.30
Loans in Foreclosure Declining
Source: MBA National Delinquency Survey
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
2001
- Q
1
2001
- Q
3
2002
- Q
1
2002
- Q
3
2003
- Q
1
2003
- Q
3
2004
- Q
1
2004
- Q
3
2005
- Q
1
2005
- Q
3
2006
- Q
1
2006
- Q
3
2007
- Q
1
2007
- Q
3
2008
- Q
1
2008
- Q
3
2009
- Q
1
2009
- Q
3
2010
- Q
1
2010
- Q
3
2011
- Q
1
2011
- Q
3
2012
- Q
1
2012
- Q
3
2013
- Q
1
2013
- Q
3
2014
- Q
1
2014
- Q
3
2015
- Q
1
Per
cen
t
Percent of Loans in Foreclosure Non-seasonally adjusted
Foreclosure Inventory (NSA)
Foreclosure Starts Back to Pre-Recession Level
Source: MBA National Delinquency Survey
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
2001
- Q
1
2001
- Q
3
2002
- Q
1
2002
- Q
3
2003
- Q
1
2003
- Q
3
2004
- Q
1
2004
- Q
3
2005
- Q
1
2005
- Q
3
2006
- Q
1
2006
- Q
3
2007
- Q
1
2007
- Q
3
2008
- Q
1
2008
- Q
3
2009
- Q
1
2009
- Q
3
2010
- Q
1
2010
- Q
3
2011
- Q
1
2011
- Q
3
2012
- Q
1
2012
- Q
3
2013
- Q
1
2013
- Q
3
2014
- Q
1
2014
- Q
3
2015
- Q
1
Per
cen
t
Foreclosure Starts Rate Non-seasonally adjusted
Foreclosure Starts (NSA)
Commercial/Multifamily Markets
Multifamily Mortgage Debt Outstanding ($ millions)
Source: MBA Commercial and Multifamily Mortgage Debt Outstanding
Contact Information & MBA Resources
Mortgage Bankers Association1919 M Street NW, 5th Floor
Washington, DC 20036
MBA Research page: www.mba.org/research
Research Institute for Housing America: http://www.housingamerica.org
MBA Newslink: http://www.mortgagebankers.org/NewsandMedia/MBANewsLink
Mike FratantoniChief Economist & Senior Vice President
Research & Industry [email protected]
202-557-2935
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