Following a record-setting year that saw nearly $3.8 trillion in loan originations, industry observers are predicting a smaller, though still substantial, market in 2021 with a significantly larger share of purchases. The latest estimate from the Mortgage Bankers Association (MBA: March 2021 Forecast) predicts that volume will decline by roughly 16% this year to $3.2 trillion as the refinance market cools and purchase volume climbs to a healthy $1.67 trillion level.
The continuing low interest rate environment, work-from-home trends and maturing millennials are all driving purchase demand. This demand, however, is bumping up against low housing inventory, and has driven up home prices to new highs: 9% higher year over year with the average loan amount growing to a record $402,200 in December.
If the past is predictive, the coming shift to a purchase market, combined with higher home prices and the enticement of quick appreciation, may result in a resurgence of fraud for housing schemes. The question is: will our industry be ready?