The Association of Mortgage Bankers (M.B.A.) announced Sunday that it expects total mortgage origination volume for single-family homes to rise to $2.2 trillion in 2026, up from an expected $2.0 trillion in 2025.
Mike Fratantoni, chief economist and senior vice president for research and business development, spoke at the 2025 annual convention and expo; Joel Kan, vice president and deputy chief economist; and Marina Walsh, CMB, vice president of industry analysis, presented 2026 outlooks.
Purchases are expected to rise 7.7% to $1.46 trillion next year, while refinancing transactions are expected to rise 9.2% to $737 billion. Based on the number of loans, total mortgage volume is expected to increase 7.6% to 5.8 million loans in 2026, compared to the 5.4 million loans expected in 2025, the presenters said.
Fratantoni said the economy will grow below trend pace in the coming year due to a weakening global economy and uncertainties about the impact of higher tariffs.
“The FOMC cut rates in September, and we expect further cuts in late October and into December. While inflation is still above the Fed’s target, the labor market has weakened and we expect the FOMC to continue to focus more on its full employment goal,” Fratantoni said.
Fratantoni added that the labor market is likely to weaken in the coming year even without large-scale layoffs. Meanwhile, the pace of hiring remains slow and the unemployment rate is expected to rise from the current level of 4.3% to 4.7% by mid-2026.
“We expect home sales to increase in 2026. The combination of lower mortgage rates and flat home prices has helped improve affordability. While mortgage rates are not expected to decline further, housing supply has increased in recent months, which will smooth home price growth and provide more housing options for potential buyers,” Fratantoni added. “The increase in inventories will put downward pressure on home prices across the country. The decline in home prices nationally is expected to moderate for several quarters in the coming years.”
Fratantoni said growing budget deficits and high inflation expectations will keep longer-term interest rates from falling further even if the Fed cuts short-term rates. It will lead to the interest rate on ten-year government bonds exceeding 4% in 2026 and the mortgage interest rate between 6% and 6.5%.
MBA expects that there will be periods when interest rates fall, which will bring moments of refinancing activity, similar to what occurred several times in 2025.
Housing market developments will be location-specific, Kan shared with the audience, noting that growing housing inventory in markets such as Florida, Colorado and Arizona has led to annual declines in home prices. On the other hand, tight inventories and housing construction challenges in the Northeastern and Midwestern states, such as New York, Connecticut, Illinois and New Jersey, are pushing price growth well above the national average.
“Although average principal and interest payments are gradually decreasing, they are significantly higher than they were five years ago given the cumulative increase in home prices and current levels of mortgage rates. Borrowers have increasingly turned to ARM and FHA loans to address these affordability issues. Additionally, the cost burden of rising taxes and homeowners insurance continues to pose challenges for both potential homebuyers and existing homeowners,” said Kan.
Walsh noted that the second quarter of 2025 saw the highest production profitability since 2021, ending a streak of 10 quarter-over-quarter net production losses.
“Start-up costs are still high and the flow from loan closings to applications has decreased over the past four years,” Walsh said. “Many lenders are exploring ways to reduce production costs and increase productivity through technological advancements and process improvements. Other lenders may be considering mergers or acquisitions to achieve scale.”
Walsh continued: “The services side of the business has been a bright spot in recent years, generating revenues that offset weak origination results and also provide recapture opportunities.”
According to Walsh, default rates – especially for government loans – are likely to rise as unemployment rises, putting pressure on servicing costs.
“American homeowners have built up approximately $36 trillion in equity in their homes, providing a financial cushion. This build-up of equity gives many borrowers options to resolve financial problems – including paying down loans, cash-out refinances and home equity loans, or selling their homes to avoid foreclosure.”
MBA also released an updated forecast for commercial and multifamily production: commercial real estate financing volume is expected to grow by 24% in 2026 and multifamily housing volume by 16%, following solid growth for both in 2025.
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