The Mortgage Bankers Association increased its 2016 industry originations forecast to $1.48 trillion from its January projection of $1.38 trillion to reflect market turmoil that has held interest rates down.
Rates are still expected to rise during the year, but at a pace slower than was thought just a month ago, Lynn Fisher, the MBA's vice president of economics and research, explained at the group's National Mortgage Servicing Conference in Orlando, Fla.
"Financial market gyrations" have led investors to seek safer places to put their money, and that has driven down the yield on the 10-year Treasury even after the Federal Reserve raised short-term interest rates, she said.
If the 10-year rates (which serve as a benchmark for mortgage pricing) stay put, "it could be a boon for the housing market" and "a silver lining" to the economic turmoil driving those gyrations, Fisher continued.
The new forecast calls for purchase loan volume of $963 billion and refinance volume of $520 billion. In January, the MBA projected volume of $926 billion and $454 billion, respectively.
The MBA also revised its 2015 origination data, and now says the industry last year did a total of $1.6 trillion in volume, of which purchase made up $881 billion and refis $749 billion. Previously, the organization said there was $1.49 trillion in volume last year.
For 2017 the MBA is now projecting $1.4 trillion in originations, with over $1 trillion of those expected to be home purchase loans.