Before the housing market and mortgage business get better, things will become worse. This is the main finding of a team of Fannie Mae analysts who this week drastically cut their prediction for home sales in 2022. According to a statement from Doug Duncan, chief economist of Fannie Mae, housing is still unmistakably in decline. It has been due to disproportionate home price rises and the sharp and quick rise in mortgage rates.
Additionally, according to the most recent projection, overall mortgage origination will drop to $2.47 trillion in 2022 from $4.47 trillion in 2021. In 2023, it is anticipated that the mortgage market will contract, even more, falling to $2.29 trillion.
A challenging housing market has already tested mortgage lenders’ business models, and it will be some time before things get better. According to the Mortgage Bankers Association, nonbank mortgage lenders lost $82 on average per loan in the second quarter of 2022. In addition, only 57% of the enterprises in the MBA survey were profitable in the second quarter when combining production and servicing operations.
In response to the decline in origination activity, many lenders have begun laying off hundreds of thousands of employees. According to Fannie Mae forecasters, the prediction for home sales has been revised, primarily due to a decline in new home sales, despite mortgage rates have settled in the low 5% range over the past month. Existing home sales anticipate a drop of 16% to 5.143 million in 2022, while new home sales are predicted to decline by 18% from last year. To read more on the housing market, click here.
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