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DES MOINES, Iowa –iEmergent, a Des Moines, Iowa-based forecasting and advisory services firm for the financial services, mortgage and real estate industries, issued its most recent 2015 - 2019 U.S. Total Mortgage Volume Forecast today. The firm projects that 2015 purchase mortgage lending activity will rise modestly and the refinance range will continue to be weak and volatile, although the size of the gain remains uncertain as interest rate increases, global economic uncertainty and credit availability still threaten to minimize the overall improvement in the housing market. Highlights of the forecast include:
The projected 2015 purchase dollar volume of $782.6 represents a 9.34% increase from estimated purchase dollar volume for 2014, with the change in purchase loan units hovering around 7.8%. A 10% increase in refinance dollars is also expected, resulting in a range of $1.08 trillion to $1.16 trillion for total expected U.S. mortgage volume in 2015.
Purchase lending will continue to dominate through 2015 and into 2016 with owner-occupied purchases representing 90% and non-owner-occupied purchases comprising 10% of all purchase volume. The ebb and flow of refinance activity will continue around low levels similar to those in 2014, as interest rates fluctuate. If the U.S. economy continues to see improvements in the labor market and small gains in wages and income, the size of the total available household pool that is willing, ready and able to buy a home should start to increase demand for the first time since 2008.
“Even though we are seeing some signs that housing is slowly recovering, there are still many factors and forces at work that could make for a very turbulent year. On one hand, home prices are slowly rising, interest rates still remain low and job growth seems to be steady – all of which bode well for housing,” said Dennis Hedlund, founder of iEmergent. “Yet, if even one of those factors is removed from the equation, or credit availability remains tight despite new initiatives to help first-time homebuyers or those with limited savings, housing could easily sputter backwards and recovery would stall for a period once again.”
The anticipated growth in purchase lending varies from market to market, with Florida, New Mexico and Maryland showing increases of more than 14% in purchase dollar volume, and Montana, Iowa and North Dakota gaining less than 3% from 2014 to 2015. Among metropolitan areas, three of the top five markets for purchase dollar growth over the next 5 years are in Florida: Palm Coast, Naples-Marco Island and Orlando. Housing affordability, overall household demographics and market-specific boom-to-bust volatility from 2005-2013 impact how individual markets will change from 2014 forward.
“Even if the composite U.S. housing market looks like it’s starting to stabilize, there will be vast differences in how individual markets and communities will behave across the country,” said Hedlund. “Some communities are already on a solid path to recovery while others will still struggle to find a foothold in 2015.”