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iEmergent's 2017-2018 Mortgage Opportunity Forecast

Posted By iEmergent Research on Aug 04, 2017
<p>iEmergent's updated 2017-2018 forecast is complete. Learn what's forthcoming for the U.S. mortgage market.</p> <p><a href="http://www.iemergent.com/images/default-source/default-album/2017-2018-iemergent-forecast-summary.png?sfvrsn=0" target="_blank"><img src="/images/default-source/default-album/2017-2018-iemergent-forecast-summary.png?sfvrsn=a749eb2_0" displaymode="Original" alt="2017-2018 iEmergent Forecast Summary" title="2017-2018 iEmergent Forecast Summary" /></a></p> <p>Halfway through 2017, our slow but lengthy recovery chugs on, while Congress struggles to make headway on the Trump administration&rsquo;s fiscal policy initiatives.&nbsp;Healthcare reform efforts have stalled; tax reform efforts have only recently begun to show signs of progress; and infrastructure investment plans seem nearly forgotten. However, the economic situation&nbsp;is generally good.</p> <ul> <li>While Q1 real GDP only grew an anemic 1.2%, the early estimate for Q2 is up 2.6%, led by rising consumer consumption. This is now the third longest expansion since WWII, although it is the slowest in terms of average quarterly growth.</li> <li>Job growth continues to be solid, although wage growth has been slower than expected.</li> <li>Inflationary pressures are nil, with recent declines in both CPI and PCE deflator indexes.</li> <li>Stock market indexes continue to hit new highs, while consumer and business confidence indicators remain elevated.</li> <li>Housing market indicators continue to be mixed.&nbsp; New construction is still sluggish, but sales are up relative to last year despite continued low inventory and strong home price appreciation.</li> <li>Delinquency and foreclosure rates continue their slow, steady improvement.</li> <li>Household balance sheets continue to improve, with home equity and stock market gains raising net worth.</li> </ul> <p><a href="http://www.iemergent.com/images/default-source/default-album/2017-2018-mortgage-origination-forecast.jpg?sfvrsn=0" target="_blank"><img src="/images/default-source/default-album/2017-2018-mortgage-origination-forecast.jpg?sfvrsn=de749eb2_0" displaymode="Original" alt="2017-2018 Mortgage Origination Forecast" title="2017-2018 Mortgage Origination Forecast" /></a></p> <p>For the mortgage market, the 2017 outlook looks a bit better than expected.&nbsp; Lack of progress on fiscal stimulus, as well as slow GDP growth, have meant less upward pressure on bond yields, which have trended down since January.&nbsp; While the refinance market will still decline sharply from 2016, moderating mortgage interest&nbsp;rates will soften that decline, so we&rsquo;ve raised our refinance outlook slightly.</p> <p>Our 2017-18 purchase market outlook also appears brighter.&nbsp; The steady economy, healthy labor market, still low mortgage rates, and stronger household balance sheets all improve the potential for more home purchase originations. &nbsp;Our 2017 purchase forecast is now $1.09 trillion, revised&nbsp;upward from our previous forecast of&nbsp;$1.03 trillion.&nbsp; We project that the increase in purchase originations will continue, reaching slightly over $1.2 trillion&nbsp;in 2018.</p> <p>Overall, we predict a 2017 mortgage origination market of $1.61 to $1.74 trillion &ndash; a smaller decline than previously expected &ndash; but still a substantial drop from 2016.&nbsp;Refinance activity will continue to decline in 2018; however, a continued increase in purchase mortgages will combine to reach total originations between $1.63 to $1.74 trillion.</p>

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