- 4 weeks ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Marina Walsh, vice president of industry analysis at the Mortgage Bankers Association, about the MBA’s forecast for 2026 on mortgage rates, home prices and profitability.
Related to this episode:
MBA forecasts mortgage origination volume of $2.2T in 2026
https://www.housingwire.com/articles/mba-forecasts-2-2t-mortgage-origination-in-2026/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
To learn more about Trust & Will, click here.
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper lo
Related to this episode:
MBA forecasts mortgage origination volume of $2.2T in 2026
https://www.housingwire.com/articles/mba-forecasts-2-2t-mortgage-origination-in-2026/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
To learn more about Trust & Will, click here.
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper lo
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NewsTranscript
00:00Welcome, everyone. My guest today is Marina Walsh, the Vice President of Industry Analysis
00:05at the Mortgage Bankers Association, to talk about the MBA's forecast for 2026. Before
00:11we jump in, I want to say thank you to our sponsor, Trust in Will, for making this episode
00:16possible. Marina, welcome back to the podcast. It's great to be here, Sarah. It is great
00:26to be here, especially in person at MBA annual at the conference. Of course, you gave an
00:32amazing panel up there with with Joel and with Mike, Fred and Tony. And so want to kind of
00:38dig in on some of the economic things you talked about specifically, you know, some of the good
00:43news that we heard. So so let's dive in there. Let's talk first about what you guys are projecting
00:48for origination volume for 2026. Well, the good news is that originations volume is going
00:55up. That's good. It's 8%. It's something it's going up to 2.2 trillion and similar percentage
01:038% based on units. So that's all good news. In terms of the split between purchase and refi,
01:09we're thinking probably about two thirds purchase and then one third refi. So certainly an improvement
01:16over what we saw in 2023, 2024. But it's going to pretty much flatten out over the next three
01:23years, though. So we're not going to see any huge spikes, just incremental improvements.
01:29What do you say like I know that there are some lenders who are staffing up for a refi boom,
01:35a small refi boom, what do you what do you what's your thought on that and refi versus purchase?
01:39Yeah, we haven't seen that in the data that we have available to us in terms of employment. What
01:46we've seen is a decline in mortgage industry employment over the last three years, a decline
01:54of about 36%. And now it's just leveled off. So we're not seeing a lot of staffing up. But I think
02:03with all of the volatility in the markets right now, we are going to have these green shoots of
02:09opportunity. There could be cash out refinance opportunity, there's definitely arm opportunity
02:15too, even borrowers going from fixed rates into arms. And we're also seeing home equity opportunity
02:23as well, because we're sitting on homeowners are sitting on $36 trillion of accumulated home equity.
02:30So there are potential but but in terms of the refi boom, it's going to be these small green shoots
02:37of opportunity, sort of like what we saw last month. I think that's really interesting because in your
02:42on the panel, you guys made the point that like, when those opportunities come, people jump on them,
02:47it's a very short term opportunity. And then it goes back to like, maybe a more normal mortgage rate.
02:52So people have to be prepared, you have to be prepared, especially when it comes to jumbo borrowers,
02:59because they're the first ones who will want to refinance. So recapture has historically not been
03:05very good. If you're servicing the loan, I mean, maybe one in five loans is recaptured. Maybe the
03:12trigger leads legislation will help that goes into effect in March of 2026. So if you're a servicer,
03:20or an originator, or a bank, with the bank customers that might help a little bit. But I think there's a
03:28way to go, there's a lot of room for improvement. We've heard so much at this convention about AI, and
03:34predictive analytics. Well, it's really now more important than ever, when those opportunities
03:40come to take advantage of them. I, you know, when you talk about the recapture rate, I feel like we
03:45have been battling that we've been you've been talking about that from the stage for how many
03:49years? Like, when is that going to change? I know, I mean, it reached its peak, it was in its mid 30s,
03:56with the harp refinancings back in 2012. But I do believe there's so much more data
04:03that lenders are getting on borrowers and propensity of borrowers to prepay that I do think,
04:11and with this legislation, the trigger leads legislation, we could see that hopefully pick up.
04:19But it's really essential to stay in business to be a good performing mortgage company in this market.
04:26And I think that it's top of mind, maybe because of the trigger leads bill,
04:30but it seems to me that it's much more top of mind for people now than maybe sometime in the past.
04:35It seemed like, how can you be laissez-faire about that? Like, this should be your number one job,
04:39right? Is to make sure that the people you've served before come back.
04:43That's absolutely right, Sarah.
04:44Okay, so you mentioned the number of people that have left the industry or have been let go,
04:49whatever. And you guys have been tracking that pretty closely. I remember in 2023,
04:54it was some pretty harsh statistics that you guys were like, this is what probably has to happen to
05:00match the origination level. About where did you come out on that?
05:03We did pretty well. We did an analysis and we were in the low 30s. It was a little bit higher
05:10at 36% based on the BLS data, but we're also tracking employment based on the NMLS data on number
05:18of loan originators, as well as our quarterly performance report data. Now for independents,
05:25that drop in mortgage employment was more severe. So we were more in the range of 43%.
05:32Wow. Banks tend to hold on to their employees because it's part of their culture, but they
05:37also don't staff up. So that explains some of the differences between our various data sources on
05:44employment. But I think it's steady as you go. I'm not hearing a lot about staffing up though.
05:52Okay. Well, that's interesting. Not yet. Well, it was anecdotal. People talking to me saying,
05:56oh, this lender has hired all these people. Yeah. Now that said, there could be more consolidation
06:04in the industry. We saw that in the Home Mortgage Disclosure Act data, where in terms of the number
06:11of just non-depositories between 23 and 24, it dropped by over 70 companies. So it could be,
06:18there have been some very high profile M&A deals, but there could be smaller M&A deals taking place.
06:26And there's just not as much splash in the trades about it. But it could be, again, volume is not
06:34going to see, there's not going to be a huge, huge pickup in volume. It's certainly going to be better
06:42than what it was this year. And last year, 8% is something. But at the same time, you know,
06:51it's very important for those, the companies out there to be performing and have that net financial
06:57income because you can't continue to have really 10 quarters of net production losses indefinitely.
07:05Right. Absolutely. Which is what we saw. Yeah. Well, let's talk about affordability, which hopefully
07:09will help this origination. That's what you're looking at. So what part of the overall picture
07:15do you say, here's where affordability is getting better?
07:19It's tough. Housing affordability continues to be a challenge. Now, in terms of housing inventory,
07:27we're expecting less in terms of home price appreciation. Okay. At some points, we were
07:32seeing home price appreciation year over year in the high teens. So it was very high. Now we're
07:38expecting it to be flat to slightly down, but it's really relative. It's important to understand it's
07:45different depending on where you are in the country. Okay. So for instance, if you're in the Midwest,
07:50or if you're in the Northeast, where it's harder to build, inventory is still very tight. And
07:56affordability conditions are tough there. Whereas Florida, Texas, Colorado, they're actually seeing
08:06some depreciation overall. So there's more housing inventory available. So that helps to some extent.
08:13At the same time, you know, the economy is slowing down. We have issues not only with principal and
08:19interest payments, but taxes, insurance, condo fees, HOE fees. So it complicates the equation in terms of affordability.
08:29But certainly rates, stabilizing rates, you know, we're not expecting a huge increase,
08:36it's probably going to stay between six, six and a half percent over the next three years.
08:40So that is encouraging. And just the fact that there is still demand to buy homes. Folks want to
08:49buy homes. You know, there is that pent up demand when you think about the buyers we've been missing
08:54over the last four or five years. Like at some point, those people have to get a house, right?
08:59They have to move up, they have to move down, they have to do all those kinds of things. So we do have some
09:04of that pent up demand, I think. And at the same time, existing homeowners can't stay put forever.
09:10We've been talking about how no one's moving because of their low rate mortgage. Well, things happen.
09:16You know, we were at a floor, there's death, there's diapers, there's what are the all the D's? Divorce,
09:23right? You name it. And so there are life events that happen. And people need to move. And they can't
09:30postpone their lives indefinitely. And you know, moving forward, that they'll need to move even,
09:38even if they're locked into a low rate. So I think rates are so interesting, right? It's all relative.
09:44Of course, people have been in the industry since the 80s. They're like, these are not high rates,
09:47stop calling them high rates. But like, for you know, if you're used to like, you know, three,
09:52four or five, these are like high rates. On the other hand, what was it 18 months ago, two years ago,
09:56we had 8%. It reached 8%. So compared to that, low sixes is great. Yeah, well, at the same time,
10:03they say, yeah, but the average loan balances are going up. True. So that's true. I mean, it is a,
10:10it is complicated. It is a complicated thing. What else are you looking at, like,
10:14the broader economy wise that could affect the housing market?
10:18What happens in terms of the overall economy? You know, what the impact of tariffs on the economy,
10:25inflationary pressures, there still are those inflationary pressures, even though right now,
10:33if you think of the dual mandate of the Federal Reserve, which is price stability and full employment,
10:40it's leaning more towards employment, there could be those inflationary pressures that could potentially
10:46lead to higher rates. But again, we're expecting a steeper yield curve is what we're expecting, just a
10:53steeper curve in general. So, you know, we'll see. And any type of announcement coming out of
11:00Washington or could, could cause additional volatility. So yeah, you know, I mean, you guys put
11:08on events, we put on events. And there's always this thing where, you know, we you send out questions,
11:12and if it's about an economic or, you know, political topic, and then you're like, listen,
11:16let's talk in the green room, let's talk before we get on stage, because anything could happen at some
11:20point. And and we know that's a very volatile environment, as far as like, things change
11:23quickly, there's a lot of action being taken by this administration. And so, you know, it's a little
11:29bit hard to predict. You're absolutely right. And we're gonna have a new Fed chair coming in very
11:35soon. Great. Yeah, we'll see what happens with that. Let's talk about profitability, right? This is
11:41a great near and dear to my heart, Sarah, thank goodness. So what are you seeing there? What are
11:48you forecasting for 2026? Oh, goodness. Well, thank goodness, we don't officially include
11:54profitability in our forecast. But what I would say is that second quarter data, which is the most
12:02current we have, things were heading in the right direction. And then it was about 25 basis points of
12:08net production profits, which translates into a little less than $1,000 alone in profit. But
12:16there is so much variance, there's a big variance between the top performers and the bottom performers.
12:23So the top performers, economies of scale helps, it helps to have larger loan balances,
12:29it helps to have some non agency product, we heard a lot about that at this convention, pros and cons
12:35associated with that. And so there, you know, and it also depends on which production channel you're
12:41in broker wholesale is doing very well. So lots of variance, I would say, between the top and bottom
12:51performers. But third quarter, I would expect to be pretty good. I've heard from a lot of lenders,
12:58we don't have the data yet for the third quarter, but I imagine that we'll be, you know, in the black
13:05in the third quarter, just because we had that refinance boom let. So that should help. Again,
13:13it's hard to predict profitability going forward, other than to say that volume will be up. And so that
13:20certainly will help the industry overall. But we'll see, hopefully, hopefully no more of the 10
13:30quarters of net production losses. But yeah, I was gonna say, I mean, when when 25 points is like,
13:36you know, we're excited about that. It just shows you where we've been. I mean, I am excited. I'm glad,
13:41you know, obviously, we hope people make money, but it's rough. Yeah, a big part of it, I would just say,
13:46Sarah, a big part of the profitability equation is not necessarily revenues. Revenues are decent.
13:55350 basis points is kind of the average that we have from 2008 to the present on a simple average
14:02basis. So it really is managing that cost, that cost per loan. So even though gross expenses have dropped
14:11between peak and trough, you know, 40%, those expenses have really come down. It's still those per loan
14:20costs that that look disproportionate. And there's also issues with pull through. You look at application,
14:28you look at the closings to applications, pull through has been dropping. So there's a lot of work
14:34being expended without a final product, so to speak. So hopefully, again, with technology advances,
14:42we'll get smarter, we'll know when borrower, you know, these applications aren't going to close.
14:48But pull through is is is tough. That's really dropped over the last three years. Do you attribute
14:54that pull through drop to just that they're shopping more, that they're filling out more applications?
14:59Like what do you see in the data? They are filling out more applications. That's what I heard from
15:04some of our lenders. But it also could be denial rates. It could be that they didn't think about the
15:11cost associated with taxes and insurance and all those additional fees. So that's a big part of it
15:17as well. That makes a lot of sense. Marina, thank you so much for joining us today. I really appreciate it.
15:22Oh, it was wonderful to be here. Thanks for having me.
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