What Will Move The Market Going Forward?
The market is challenging right now and most are predicting more of the same next year. The MBA said that by loan count, total mortgage origination volume is expected to decrease by 5.6 percent to 5.0 million loans in 2027 from the 5.3 million loans expected in 2026. But despite these trends, there is hope.
MBA Chief Economist and Senior Vice President for Research Mike Fratantoni projects U.S. economic growth of 1.8 percent over the next year, as elevated interest rates, rising energy prices, and persistent inflation weigh on growth and keep interest rates higher for longer.
“Mortgage rates have recently spiked to their highest level in more than three years, while 10-year Treasury rates have reached their highest levels in 24 years. Around the world, there are too many borrowers and not enough savers. Inflation is too high, leading central banks to raise short-term rates, while budget deficits and debt are unsustainably high, leading bond investors to push up longer-term rates,” said Fratantoni. “MBA expects that mortgage and Treasury rates are likely to come down from their recent peaks, but will remain on a higher path than previously forecast, which will be a serious headwind for origination volume for the remainder of this year and into 2027.”
MBA forecasts that the 10-year Treasury yield will average 5.1 percent in the fourth quarter of 2026 and remain close to 5 percent through 2027. MBA expects that the 30-year mortgage rate will average 7.3 percent in the fourth quarter of 2026 and remain above 7 percent through 2027.
“The FOMC hiked the federal funds rate by 25 basis points in September, and we expect two additional 25 basis point hikes, one in December of this year and the second in the first quarter of 2027. Inflation remains well above the Fed’s target, and while the job market is not strong, we expect that the FOMC will continue to focus intently on pushing inflation down to its 2 percent inflation target,” said Fratantoni. “The job market will likely hold steady over the next year. The unemployment rate is forecast to increase slightly from its current rate of 4.2 percent to average 4.3 percent over the course of 2027.”
Despite this forecast, there is hope for positive movement. How? Strong companies are making moves right now. Those companies are taking steps to excel in this mortgage market. Because of the power of these companies to make positive change, PROGRESS in Lending is launching the Market Mover Award for companies that are developing strategies and taking steps to thrive now and into 2027. Starting on Monday October 26, we will start accepting nominations for this important honor.
So, get ready to apply. For right now, there’s only 5 days left to apply for our prestigious Thought Leader Award, which goes out to executives that have bold, new ideas on how to advance our industry. Applications must be in by this Friday, October 23, to qualify so get your application in here.
The Place for Lending Visionaries and Thought Leaders. We take you beyond the latest news and trends to help you grow your lending business.
