Persistent economic trends that include inflation, a strong labor market and real gross domestic product (GDP) growth will continue to “dampen” mortgage origination activity through at least the end of 2026, according to the newest U.S. mortgage originations outlook from financial services forecasting and advisory company iEmergent.

Based on 2023 Home Mortgage Disclosure Act (HMDA) data, the iEmergent analysis predicts that purchase mortgage volume will rise by roughly 9% in 2024 compared to last year. But this will primarily be driven by larger loan amounts rather than a larger number of originations. Meanwhile, refinance transactions are expected to increase modestly to 18% of all originations, up slightly from a record-low share of 17% in 2023.

In terms of dollar volume, total mortgage originations in 2023 finished at $1.443 trillion, with $1.567 trillion anticipated by the end of 2024. Of that total, $252 billion is expected to come from refinances.

A “mild decline” in GDP growth in 2025 could lead to a softening of both mortgage rates and home prices, leading to slightly higher origination levels and growth in refinance transactions that is tempered by recent historic lows. iEmergent forecasts 2025 originations to be at $1.761 trillion, with $370 billion (or 21%) of the total coming from refinances.

It is not until 2026 that the firm predicts mortgage origination volume will approach 2022 levels, as moderating rates are expected to fuel additional recovery of refinance volume in terms of originations and dollar amounts. The forecast for 2026 currently stands at $2.014 trillion, with 26.7% (or $538 billion) expected to come from refinances.

“The American economy has proven surprisingly resilient, and that very resiliency has kept interest rates higher than anticipated for longer than expected,” iEmergent CEO Laird Nossuli said in the report. “When you factor in an affordability crisis and an acute housing shortage, it’s no wonder origination volumes continue to suffer.

“As economic growth slows over the next couple of years, we could finally see some improvement, provided inventory scarcity is addressed. As markets recover, origination opportunities will be unevenly distributed, making our census-level forecasts a critical tool for shaping lenders’ growth strategies.”

iEmergent’s forecasts through 2026 are more conservative than those of the Mortgage Bankers Association (MBA). According to MBA’s most recent forecast from May 16, the association predicts $1.805 trillion in originations for 2024, followed by $2.084 trillion in 2025 and $2.275 trillion in 2026. The refi share is predicted to be 23.3% ($422 million) in 2024, 28% ($585 million) in 2025 and 28.4% ($646 million) in 2026.

iEmergent’s forecasts are also more conservative than those of Fannie Mae, which predicts volume to be broadly in line with MBA’s forecasts for this year — roughly $1.4 trillion in purchase volume and $368 million in refinance volume. In 2025, Fannie Mae predicts 13% growth in purchase volume for a total volume of $1.939 trillion, with 34% of that volume ($539 billion) being refinances.

Related