Quarterly Research Package and Forecast: Q4 2021
Top Market Themes for January 2022
U.S. Macroeconomic Outlook
- COVID-19 cases are at an all-time high.
- The unemployment rate falls below 4%, but the Great Resignation continues.
- Inflation is at levels not seen since the 1980’s.
U.S Housing Market Outlook
- Mortgage rates are rising, and affordability still remains high.
- Inventory for available homes are near record lows while demand remains very strong.
- Due to the lack of supply and high demand, house prices continue to increase 17% YoY in November.
U.S. Mortgage Market Outlook
- New mortgage borrowers have exceptionally high credit scores leading to historically low rate of new delinquencies.
- Foreclosures have dropped as a result of forbearance and other policies.
- Refinance activity slowing down due to higher mortgage rates.
- As refinance activity slows, mortgage originations are set to decline from record 2020.
Fourth Quarter Forecast Released on January 21, 2022
- The average 30-year fixed-rate mortgage (FRM) is expected to be 3.6 percent in 2022 and 3.9 percent in 2023. In 2021, the 30-year FRM averaged 3.0 percent.
- House price growth is expected to be 6.2 percent in 2022, slowing to 2.5 percent in 2023. House price growth was 15.9 percent in 2021.
- Home sales are expected to be 6.9 million in 2022, increasing to 7.0 million in 2023. Home sales were 6.9 million in 2021.
- Home purchase mortgage originations are expected to increase from 1.9 trillion in 2021 to $2.1 trillion in 2022 and $2.2 trillion in 2023.
- Refinance originations are expected to continue to soften, declining from $2.7 trillion in 2021 to $1.2 trillion in 2022 and $930 billion in 2023.
- Overall, annual mortgage origination levels are expected to be $3.3 trillion in 2022 and $3.1 trillion 2023, down from $4.7 trillion in 2021.