NASHVILLE, Tenn. A mortgage industry group is expecting a recession to hit the US economy.
“We’re forecasting a recession for next year,” Mike Fratantoni, senior vice president and chief economist of the Mortgage Bankers Association, said Sunday during the industry group’s annual conference in Nashville, Tenn.
“There’s potential upside for the industry, that’s what’s likely to bring rates down a little bit,” he said.
See alsoMortgage bankers predict rates will fall to 5.4% in 2023. Here’s what it means for home prices.
Fratantoni said in a statement that the MBA forecast calls for a recession in the first half of 2023, and predicts the unemployment rate will rise from 3.5% to 5.5% by the end of next year.
“We are starting to see some significant signs of softening in the labor market,” said Frantoni.
He expects that companies will no longer scramble to fill job openings, and that hiring will eventually calm down.
He said, on average, in 2023, the economy is expected to lose 25,000 jobs per month, and end the year with employment at 5.5%.
This is in stark contrast to the latest unemployment rate in September, which stood at 3.5%, According to the Bureau of Labor Statistics.
“So a very, very different job market to today,” said Frontontoni. “I expect the next few months to be a very sudden change.”
With a recession on the horizon, mortgage rates are expected to come in closer to 5.4% late next year, he said, the 7%-plus rate the market is seeing today.
“We stand by our view that this is just a spike, driven by financial-market chaos, increased levels of market volatility and this global recession, which we are about to experience, is likely to start a recession in the US. Will go Pull this number out,” Fratantoni said.
Seeing it Huge hike in rates this yearCompared to 3.85% a year ago with an average rate of 6.94% last week with a 30-year fixed rate, many potential home buyers have decided to wait because their estimated monthly mortgage payments become unrecoverable.
Home sales have fallen, and home prices are falling. Sellers are also offering more discounts in their efforts to woo buyers.
As a result of the recession, MBA expects total mortgage origination volume to fall to $2.05 trillion in 2023 from an estimated $2.26 trillion in 2022.
They are also expecting a 3% drop in purchase originations and 24% in refinancing.
Fratantoni also expects crime to rise from a 40-year low.
Credit: www.marketwatch.com /