Single-family mortgage origination volume is expected to decrease by 5 percent to just under $2 trillion in 2027, according to the Mortgage Bankers Association (MBA).
Purchase originations are forecast to increase 0.8 percent to $1.42 trillion next year and refinance originations are expected to drop by 17 percent to $571 billion. By loan count, total mortgage origination volume is expected to decrease by 5.6 percent to 5.0 million loans in 2027 down from the 5.3 million loans expected in 2026.
“Mortgage rates have recently spiked to their highest level in more than three years, while 10-year Treasury rates have reached their highest levels in 24 years. Around the world, there are too many borrowers and not enough savers. Inflation is too high, leading central banks to raise short-term rates, while budget deficits and debt are unsustainably high, leading bond investors to push up longer-term rates,” Mike Fratantoni, chief economist and senior vice president for research and business development at MBA, said. “MBA expects that mortgage and Treasury rates are likely to come down from their recent peaks, but will remain on a higher path than previously forecasted, which will be a serious headwind for origination volume for the remainder of this year and into 2027.”
MBA’s 2027 outlook was presented by Fratantoni, Joel Kan, vice president, deputy chief economist; and Marina Walsh, vice president, head of industry analysis at MBAʻs 2026 Annual Convention and Expo earlier this week.
Fratantoni projects U.S. economic growth of 1.8 percent over the next year, as elevated interest rates, rising energy prices, and persistent inflation weigh on growth and keep interest rates higher for longer.
In addition, MBA forecasts that the 10-year Treasury yield will average 5.1 percent in the fourth quarter of 2026 and remain close to 5 percent through 2027. MBA expects that the 30-year mortgage rate will average 7.3 percent in the fourth quarter of 2026 and remain above 7 percent through 2027.
“The FOMC hiked the federal funds rate by 25 basis points in September, and we expect two additional 25 basis point hikes, one in December of this year and the second in the first quarter of 2027. Inflation remains well above the Fed’s target, and while the job market is not strong, we expect that the FOMC will continue to focus intently on pushing inflation down to its 2 percent inflation target,” Fratantoni said. “The job market will likely hold steady over the next year. The unemployment rate is forecast to increase slightly from its current rate of 4.2 percent to average 4.3 percent over the course of 2027.”
Kan said mortgage rates at their current levels have caused a pullback in application activity this year, both for home purchases and refinances. Prospective homebuyers have started to put their purchases on hold, as higher rates have brought affordability challenges back to the forefront.