iEmergent's volume outlook lower than MBA or Fannie

In an industry in which one mantra has been "survive until '25," mortgage originators are likely to have to struggle through not only year but the following one as well, iEmergent said in its latest production forecast.

The same trends that affected 2023 — inflation, real gross domestic product growth, a strong labor market and tight Federal Reserve monetary policy — will hold the housing market back through the end of 2026, said Mark Watson, chief of forecasting at iEmergent, in a press release.

Watson's update also no longer sees the U.S. going into recession in 2024, bringing him in line with other industry forecasts.

Last August, iEmergent, a mortgage business intelligence firm, predicted between $1.62 trillion and $1.71 trillion for 2023 production. After looking at recent Home Mortgage Disclosure Act data, it pushed that number down to $1.44 trillion.

At that time, it also forecast between $1.69 trillion and $1.79 trillion for this year. The update puts the low point at $1.57 trillion and the high end at $1.62 trillion.

In comparison, the May forecast from the Mortgage Bankers Association found 2023 volume to be $1.64 trillion and the group is now expecting $1.81 trillion to be produced in 2024. At the MBA's Secondary and Capital Markets Conference, Jeana Curro, managing director at Bank of America said her organization now calls for $1.6 trillion in originations this year, up from $1.38 trillion in 2023.

Fannie Mae's most recent estimate for last year was $1.47 trillion of volume, in line with iEmergent's, but it forecasts $1.73 trillion for 2024 volume.

"As economic growth slows over the next couple of years, we could finally see some improvement, provided inventory scarcity is addressed," iEmergent CEO Laird Nossuli said in the press release. "As markets recover, origination opportunities will be unevenly distributed."

In its new forecast, iEmergent doesn't see originations getting back above $1.7 trillion until 2025 and barely topping $2 trillion the following year.

The MBA believes the industry will be above $2 trillion in 2025 (at around $2.1 trillion) and at $2.28 trillion in 2026.

Fannie Mae has only publicly forecast out to next year and it foresees production at just under $2.1 trillion as well.

This year's gain in dollar volume will be due to higher home sales prices, as iEmergent only thinks units produced will increase by just 400,000 to 4.51 million.

Next year, loans originated will increase to 4.95 million and in 2026, to 5.61 million. The 2026 increase will be on the strength of the refinance market, as the year-over-year gain is estimated to be 500,000 units of loans for that purpose.