MBA Chart of the Week: Annual Origination Dollar Volume
Source: Mortgage Bankers Association’s April 2025 Mortgage Market Forecast
MBA’s April forecasts and commentary include some sizable updates from our March forecasts as we try to incorporate the net impact of the frequently changing tariff landscape. While there is still significant policy uncertainty and increased market volatility, there is a near consensus among economists regarding the directional effects of the tariffs on macroeconomic measures (to illustrate, see Fed Governor Christopher Waller’s April 14 speech).
With our April forecast, we have reduced expected economic growth by almost a percentage point to 0.3% for the full year and increased our forecast for inflation by almost 2 percentage points, with an expectation that it will peak at 4.0% by the end of 2025. From day to day, markets are jumping from greater concern about the hit to growth and then rebounding to show more fear about inflation. Until we get a clear indication from hard data with respect to which of these perils is the bigger risk, we expect the Fed will be on hold through the first half of the year, but do expect that the risk to growth will eventually become the greater concern, leading the Fed to cut three more times in the second half of this year. If inflation is running even higher than forecast, the Fed may pause longer or even forego further cuts.
Slower growth and heightened uncertainty are likely to drag on housing market activity. We have lowered our estimates for existing and new home sales in 2025 to 4.26 million and 714,000 respectively, less growth in sales than we had been forecasting.
The jump in interest rate volatility has caused wider spreads, notably for mortgage-Treasury spreads. Incorporating these into our rate forecast leads to a 30-year mortgage rate expectation of 7.0% for the current quarter, dropping to 6.7% by the end of the year, and falling to 6.4% by the end of 2026. These averages are not sufficient, though. With the sharp increase in rate volatility we still expect that there will be moments of refinance opportunity, which will lead to somewhat higher refinance volume this year relative to our last forecast.
This week’s chart shows our updated forecast for annual origination volume for 2025 through 2027. Despite the large changes described above, we expect aggregate levels to be similar to our March forecast, but a shift in the mix, with more refinance volume and less purchase. Total volume in 2025 is expected to increase to $2.08 trillion, up 17 percent from $1.78 trillion in 2024. Purchase originations are expected to total $1.38 trillion compared to $1.30 trillion in 2024, while refinance originations are expected to increase to $693 billion from $491 billion.
With our April forecast, we have also increased our forecast of unemployment from 4.4% at the end of 2025 to 5.0%. The economy is on the edge of a recession, and there is certainly a downside risk that we could see not just stagnant growth as in our baseline, but a sharp contraction in the economy this year. We will continue to update you as the economy evolves and as the current level of uncertainty (hopefully) decreases.
