economic and mortgage market outlook
TRANSCRIPT
© MBA 2021
Economic and Mortgage Market Outlook
February 2021
Presented by:
Mike Fratantoni
Mortgage Bankers Association
© MBA 2021
Much of the Stimulus Has Been Saved
Source: BEA
12.0
33.7
13.7
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Personal Saving RateSeasonally adjusted, as % of disposable income
© MBA 2021
Very Different Recession Compared to 2009
Source: BLS3
Jul-09, 6
Dec-20, 1.6
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0D
ec-0
0
Apr-
01
Aug-0
1
Dec-0
1
Apr-
02
Aug-0
2
Dec-0
2
Apr-
03
Aug-0
3
Dec-0
3
Apr-
04
Aug-0
4
Dec-0
4
Apr-
05
Aug-0
5
Dec-0
5
Apr-
06
Aug-0
6
Dec-0
6
Apr-
07
Aug-0
7
Dec-0
7
Apr-
08
Aug-0
8
Dec-0
8
Apr-
09
Aug-0
9
Dec-0
9
Apr-
10
Aug-1
0
Dec-1
0
Apr-
11
Aug-1
1
Dec-1
1
Apr-
12
Aug-1
2
Dec-1
2
Apr-
13
Aug-1
3
Dec-1
3
Apr-
14
Aug-1
4
Dec-1
4
Apr-
15
Aug-1
5
Dec-1
5
Apr-
16
Aug-1
6
Dec-1
6
Apr-
17
Aug-1
7
Dec-1
7
Apr-
18
Aug-1
8
Dec-1
8
Apr-
19
Aug-1
9
Dec-1
9
Apr-
20
Aug-2
0
Dec-2
0
Ratio of Unemployed Workers Per Job Opening
© MBA 2021
Massive Deficits: US and Globally
Source: Congressional Budget Office, International Monetary Fund
© MBA 2021
Inflation Likely to Increase, Supply Constraints Likely to Bind
Source: Bureau of Labor Statistics, Deutsche Bank
CPI
Core CPI
© MBA 2021
Short-term Rates At Zero Through 2022
6Source: Federal Reserve Board, Freddie Mac, MBA Forecast
© MBA 2021
Refi Volume Robust, But Rates Have Turned?
Source: MBA Weekly Application Survey7
2.00
2.50
3.00
3.50
4.00
4.50
5.00
5.50
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Jan-1
2
Apr-
12
Jul-12
Oct-
12
Jan-1
3
Apr-
13
Jul-13
Oct-
13
Jan-1
4
Apr-
14
Jul-14
Oct-
14
Jan-1
5
Apr-
15
Jul-15
Oct-
15
Jan-1
6
Apr-
16
Jul-16
Oct-
16
Jan-1
7
Apr-
17
Jul-17
Oct-
17
Jan-1
8
Apr-
18
Jul-18
Oct-
18
Jan-1
9
Apr-
19
Jul-19
Oct-
19
Jan-2
0
Apr-
20
Jul-20
Oct-
20
Jan-2
1
Rate
Ind
ex
Refinance Index and 30-Yr Fixed Mortgage Rate
Refi Index (left axis) 30 Yr Fixed rate (right axis)
30 yr Fixed Rate
Refinance Index
© MBA 2021
Refi Opportunity…and Impact of Burnout
8
© MBA 2021
Purchase Applications Continuing Strong Annual Growth
Source: Mortgage Bankers Association 9
0
50
100
150
200
250
300
350
400
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51
Week of the Year
Purchase Mortgage Applications Index(by week of the year, NSA)
2016
2017
2018
2019
2020
2021
© MBA 2021
Home Sales Robust, But Inventory is Tight
Source: Census Bureau, National Association of Realtors
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Num
be
r o
f m
on
ths
SA
AR
, 0
00
s u
nits
Home Sales and Inventory
Existing (left axis) New (left axis) Months Supply - New (right axis) Months Supply - Existing (right axis)
© MBA 2021Source: Federal Housing Finance Agency
11
7.0%
7.8%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Home Price Changes – Purchase Only Non-seasonally adjusted, year over year percent change
United States
Home Price Growth Accelerated in 2020
© MBA 2021
Forecast Purchase Growth, Refinancing to Slow
Source: MBA Forecast
2,532
2,268
1,385
573 520
1,280
1,424 1,574
1,628 1,653
3,812 3,692
2,959
2,201 2,173
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Mortgage Originations History and Forecast
Refi Purchase Total
$Billions
© MBA 2021 13
IMB Net Production Profits in Q3 2020 Surpasses 200 Basis Points
Source: MBA Quarterly Mortgage Bankers Performance Report: www.mba.org/performancereport
© MBA 2021
IMB Production Expenses ($ per loan) Increasing with Higher Loan Balances
Source: MBA Quarterly Mortgage Bankers Performance Report
© MBA 2021 15
Will Production Revenues Hold? Mortgage-Treasury Spreads Have Narrowed
Source: Federal Reserve and Freddie Mac
-
50
100
150
200
250
300
350
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Jan-0
8
Apr-
08
Jul-08
Oct-
08
Jan-0
9
Apr-
09
Jul-09
Oct-
09
Jan-1
0
Apr-
10
Jul-10
Oct-
10
Jan-1
1
Apr-
11
Jul-11
Oct-
11
Jan-1
2
Apr-
12
Jul-12
Oct-
12
Jan-1
3
Apr-
13
Jul-13
Oct-
13
Jan-1
4
Apr-
14
Jul-14
Oct-
14
Jan-1
5
Apr-
15
Jul-15
Oct-
15
Jan-1
6
Apr-
16
Jul-16
Oct-
16
Jan-1
7
Apr-
17
Jul-17
Oct-
17
Jan-1
8
Apr-
18
Jul-18
Oct-
18
Jan-1
9
Apr-
19
Jul-19
Oct-
19
Jan-2
0
Apr-
20
Jul-20
Oct-
20
Jan-2
1
30-Year Fixed Mortgage Rate and 10-Year Treasury Yield
10-Year Treasury Note Yield at Constant Maturity (% p.a.) FHLMC: 30-Year Fixed-Rate Mortgages: U.S. (%) Spread in bps (right axis)
© MBA 2021
Technology Expense as % of Total Mortgage Company Costs
Source: PGR: MBA and STRATMOR Peer Group Roundtable Program
© MBA 2021
eNote Adoption Growing Rapidly
Source: MERS17
© MBA 2021 18Source: MBA’s National Delinquency Survey
© MBA 2021 19Source: MBA’s National Delinquency Survey
© MBA 2021 20
% of Servicing Portfolio Volume in Forbearance by Investor Type over Time
(Full Sample)
Source: MBA’s Weekly Forbearance and Call Volume Survey, as of 2/14/21
© 2021 Mortgage Bankers Association (MBA). All Rights Reserved.
© MBA 2021 21
% of Total Weekly Forbearance Exits by Reason
Source: MBA’s Weekly Forbearance and Call Volume Survey, as of 2/14/21
© 2021 Mortgage Bankers Association (MBA). All Rights Reserved.
© MBA 2021
Contact Information and MBA Resources
Mike Fratantoni, Ph.D
Chief Economist & Senior Vice President | Research and Industry Technology
(202) 557-2935
MBA Research: RIHA:
www.mba.org/research www.housingamerica.org
22