As the economy is getting back to pre-pandemic levels we are going to see the interest rates rise fairly quickly by the time 2022 rolls around. There is going to be an extremely large change in mortgages over the coming months, but the question is just how big?
According to the Mortgage Bankers' Association, there is going to be approximately a 33% decline in mortgage originations. This is due to the fact that they also predict that interest rates will rise to 4%. Interest rates right now are sitting around 3%. The interest rates are going to increase drastically in a very short period of time according to their projections. They also project that this will result in a 62% decrease in refinances.
Due to a large decrease in mortgages being taken out, lenders are going to have to look at other options to make up some of this lost revenue. One of the suggestions made by Marina Walsh was for these lenders to focus more on their servicing business.
Source: https://www.cnbc.com/2021/10/18/real-estate-mortgage-originations-will-drop-33percent-in-2022-as-interest-rates-rise.html
1 comment:
Even after the large amounts of built up savings over the pandemic, I'm still surprised by the sharp decrease in dependency on mortgages. With this in mind, I hope the effects of increased interest rates in the near future has less impact on the housing market. The meteoric rise of prices in many areas in the US has made people question if this is a bubble and raising rates too fast can ensure a burst of the bubble if it is too inflated.
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