MBA Economic and Mortgage Market Outlook Spring Mike Fratantoni Chief Economist & Senior Vice President Research & Industry Technology

Transcription

1 MBA Economic and Mortgage Market Outlook Spring 2015 Mike Fratantoni Chief Economist & Senior Vice President Research & Industry Technology

2 MBA Economic Outlook GDP Growth 2.4% 2.5% 2.5% Inflation 1.6% 0.5% 2.4% Unemployment 6.2% 5.4% 5.1% Fed Funds 0.1% 0.3% 1.7% 10-year Treasury 2.5% 2.2% 3.0% 30-year Mortgage 4.2% 4.0% 4.9% Refi originations ($ B) Purchase originations ($B) New home sales (thousand) Existing home sales (thousand) 4,920 5,069 5,411 Source: MBA April 2015 Forecast

3 The Economy

4 Economic Growth Still Dependent on Consumers Source: BEA, MBA

5 Risk to Growth - Trade-weighted Dollar Source: Federal Reserve

6 5.00 Global Rates: Divergent? year - Germany 10-year - US 10-year - Japan Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Source: Federal Reserve (FRED), CNBC

7 Job Growth Robust Source: BLS

8 Declining Unemployment, Participation Leveling Source: BLS

9 Increasing Demand for Labor Source: BLS

10 More Wage Growth in the Works? Source: BLS

11 Fuel Prices Driving Down Headline Inflation Source: BLS

12 FOMC Statement - March 2015 The door is open to an increase in the fed funds rate at the June meeting. However, it was iterated that the Committee does not want the market to lock in on the June date. Still a reasonable chance that they will wait until September or later for the first hike. Use of the term data dependent means that the Committee is paying particular attention to the job market and inflation reports over the next two months. Markets viewed this announcement as relatively dovish, i.e. the Fed could move more slowly to raise rates than had been anticipated. No change in expectations with respect to holdings of MBS and longer-term Treasuries.

13 Fed Funds & Market Expectations Source: Federal Reserve, Wells Fargo

14 Source: BEA, BLS, Federal Reserve, MBA

15 Rate Forecast Source: BEA, Federal Reserve, MBA

16 Demographics

17 Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Year over year pct chg Growth in Total Households Recovering? Population Households Source: Census

18 What About Owner Households? Source: Census

19 Mortgage Market Data

20 Refinance Activity Slowing Again Source: MBA Weekly Applications Survey

21 Lower Price Tiers Saw Slow Growth in % Purchase Applications vs Existing Home Sales Pct chg, full year % 0.0% -5.0% -10.0% -15.0% -20.0% -25.0% $0-100K $ K $ K $ K $750-1M $1M+ Purchase applications Existing home sales Source: MBA, NAR

22 Differentiated Lower Price Purchase Tiers Seeing Application Signs of Market Life in 2015 Source: MBA Monthly Profile of Mortgage Activity

23 Purchase Loan Size Growth Indicating Jumbo Dominance Source: FHFA, MBA

24 Credit Becoming More Available Slightly Source: ALLREGS, MBA

25 Credit Availability In Historical Context /2011 through present (rescaled) Source: ALLREGS, MBA

26 Overlapping Federal Agencies & Regulations holding back market growth. Origination Servicing CFPB RESPA/TILA Escrow LO Comp Appraisals HMDA ATR/QM Disparate Impact/ Fair Lending Servicing Standards HUD/FHEO QC Policy MIP Policy HPML SAFE Federal Reserve Indemnification Risk Retention/ QRM HUD/FHA LLPAs Loan Limits Basel Minimum Servicing Fees FDIC, OCC, SEC G Fees Buybacks Volcker Rule False Claims FHFA/GSEs DOJ DISCLAIMER: The policies/rules/regulations shown, Reg AB as well the corresponding authors/stakeholders, are illustrative and thus may not be an exhaustive list. Margin Rule Author of Policy/Rule/Regulation Stakeholder of Policy/Rule/Regulation Securitization/ Secondary Markets

27 Impact of MIP Reduction Source: MBA Weekly Applications Survey

28 Use of State Level Application Data 1200 DC, MD, VA - Total Index NSA DC MD VA US Source: MBA s State Applications Index Series (SAIS), NSA, 1/13/2012 = 100

29 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Use of State Level Application Data 200% Refinance Application Volume and Rates Year over year pct chg based on loan count, NSA % % % % % % Year FRM DC VA MD US Source: MBA Weekly Applications Survey / Monthly Profile of State and National Mortgage Activity

30 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Use of State Level Application Data 8.0% DC, VA, MD Share of National Refi Applications 7.0% 6.0% 5.0% 3% 4.0% 3.0% MD VA DC 2.0% 4% 1.0% 0.0% 0.3% Source: MBA Weekly Applications Survey / Monthly Profile of State and National Mortgage Activity

31 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Use of State Level Application Data 9.0% DC, VA, MD Share of National Purchase Applications 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2% MD VA DC 2.0% 1.0% 2% 0.0% 0.2% Source: MBA Weekly Applications Survey / Monthly Profile of State and National Mortgage Activity

32 Compositional Trends of Home Purchase Apps Jan 2015 DC MD VA US 30-Year Fixed 84% 90% 89% 87% 15-Year Fixed 6% 5% 5% 5% Fixed - Other 1% 1% 1% 2% Hybrid ARM 8% 5% 4% 6% Traditional ARM 0% 0% 0% 1% Source: MBA s Weekly Applications Survey / Monthly Profile of State and National Mortgage Activity

33 Home Sales Still Below Potential Source: Census, MBA, NAR

34 Builder Applications As Leading Indicator of Housing Starts Source: Census, MBA

35 Multifamily Starts Back To Trend, Single Family Lagging Source: Census, MBA

36 Shift to Purchase Dominated Market Source: MBA April 2015 Forecast

37 Contact Information & MBA Resources Mike Fratantoni Chief Economist & Senior Vice President Research & Industry Technology Mortgage Bankers Association 1919 M Street NW, 5 th Floor Washington, DC MBA Research page: Research Institute for Housing America: MBA Newslink: