Mortgage Market Poised for Growth: How 2026 Could Mark a Turning Point for Housing
The Mortgage Bankers Association (MBA) recently released its forecast for the U.S. mortgage market, calling for modest growth in single-family loan activity over the next year. According to MBA’s projections, total originations will climb to around $2.2 trillion in 2026, up from about $2.0 trillion expected in 2025.
Purchase-loan volume is projected to rise by roughly 7.7 % to approximately $1.46 trillion, while refinance volumes are forecast to expand by about 9.2 % to $737 billion. On a loan-count basis, the group anticipates total originations climbing to about 5.8 million units in 2026, up from an estimated 5.4 million in 2025.
Presenting the outlook at MBA’s Annual Convention, Chief Economist Mike Fratantoni and Deputy Chief Economist Joel Kan, along with Vice President of Industry Analysis Marina Walsh, laid out the reasoning behind the forecast.
Fratantoni cautioned that U.S. economic growth is likely to remain below trend, weighed down by global headwinds and tariff-related uncertainty. He noted the labor market is softening, projecting the unemployment rate to rise from around 4.3% to about 4.7% during 2026. Inflation, he added, will continue to be sticky as import tariffs gradually feed through to higher consumer prices.
From a housing-market standpoint, Fratantoni explained that declining mortgage rates—though not dramatically lower—combined with a gradual increase in housing supply are improving affordability. He said that while rates are unlikely to tumble to sub-5% levels, a more abundant inventory will exert downward pressure on home prices, potentially causing national price declines over the coming quarters.
Kan added that housing conditions are far from uniform: areas such as Florida, Colorado and Arizona—with growing inventories—are already seeing year-over-year price drop-offs, whereas states in the Northeast and Midwest, such as New York, Connecticut, Illinois and New Jersey, continue to experience price gains driven by tight supply.
Walsh turned attention to the mortgage industry context, noting that Q2 2025 production profitability reached its highest level since 2021—ending a long run of losses. While origination costs remain elevated and closing-rates are declining, she observed that lenders are aggressively seeking efficiency gains through technology adoption, process refinement, and consolidation. She also pointed out the servicing side of the business is performing strongly and that the roughly $36 trillion in accumulated homeowner equity provides a major buffer against distress even as layoffs or affordability pressures mount.
On the commercial front, the MBA also published updated forecasts for real-estate lending. The volume of commercial real–estate and multifamily originations is projected to increase by about 16% in 2026, with total volumes approaching $700 billion for the sector.
Other Insights:
The rise in purchase activity reflects a thawing of the “lock-in” effect: many homeowners are sitting on ultra-low rate mortgages and reluctant to trade them, but with inventory slowly rising and rate volatility growing, more sellers are entering the market.
While refinance opportunities remain limited in the near term, rate dips below ~6% are still expected to trigger temporary surges in refi activity, especially among adjustable-rate borrowers and those with shorter-duration mortgages.
Location really matters: “Sun belt” states continue to be hotbeds for bidding wars, while supply-rich areas are seeing price moderation. For agents, this means hyper-local market intelligence is more valuable than ever.
Cost burdens beyond mortgage rates — including homeowners insurance, property taxes and HOA fees — are increasingly shaping affordability dynamics. The accumulation of homeowner equity offers a cushion, but also masks emerging risk in certain segments of the market.
For new-home builders and lenders, the pressure to cut costs is mounting. Many are evaluating ways to streamline operations, adopt automation and refinance back-office systems as margins get squeezed.
