Beyond the Storm: Navigating the Uncharted Waters of the Post-Pandemic Corporate Landscape
As the storm of the pandemic begins to subside, corporate leaders face a landscape that has forever changed. The question …
October 19, 2021: According to the Mortgage Bankers Association’s releasing annual forecast, which raised interest rates will result in a sharp drop in refinance demand in the year 2022, meaning a lot less business for mortgage bankers. It predicts total origination volume will drop 33% to $2.59 trillion. MBA economists say that the average rate on the popular 30-year fixed loan will rise to 4%, a whole percentage point higher than it is now. That will result in a 62% drop in refinance originations to just $860 billion. It deepens the anticipated 14% decline in 2021 to $2.26 trillion.
“The economy and labor market rebounded in 2021, but overall growth fell short of expectations because of stubborn supply chain issues that fueled faster inflation, slowed consumer spending, and presented challenges in filling the record number of job openings available,” said Michael Fratantoni, MBA’s chief economist. “With inflation elevated and the unemployment rate dropping fast, the Federal Reserve will start to taper its asset purchases by the end of this year and will raise short-term rates by the end of 2022.”
However, originations to buy a home are forecast to rise 9% to a new record of $1.73 trillion in 2022.
Overall, this marks a change from the record-high production profits of the year 2020, when interest rates dropped to record lows and homebuyer demand soared because of the pandemic. The drop will likely result in increased competition among lenders.
“Many lenders will rely heavily on their servicing business to achieve financial goals,” said Marina Walsh, MBA’s vice president of industry analysis. “The servicing outlook is complicated today, with the expiration of many COVID-19-related forbearances and the need to place borrowers into post-forbearance workouts.”
Walsh also said that servicing costs may rise as servicers work to meet the needs and requirements of borrowers, investors, and regulators.
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