Housing professionals should expect modest growth in mortgage and home-buying activity and tempered optimism for 2026, according to projections released Sunday at the Mortgage Bankers Association’s (MBA) annual conference in Las Vegas.
The trade group is calling for loan origination volume to reach $2.2 trillion in 2026, up 10% over 2025’s anticipated $2 trillion. The MBA also sees acceleration in both purchase and refinance activity despite affordability pressures persisting into the year ahead.
Purchase mortgages will climb 7.7% to $1.46 trillion in 2026, while refinances should jump 9.2% to $737 billion, MBA said. Lenders will originate 5.8 million mortgages next year, up 7.6% from 5.4 million expected in 2025.
Meanwhile, mortgage rates, which have stayed well above 6% for much of 2025, won’t move much lower as many in the industry had hoped. MBA anticipates the 10-year Treasury yield (which mortgage rate movements tend to track) will remain above 4% and mortgage rates will stay between 6% and 6.5% in the next year.
MBA Chief Economist Mike Fratantoni tempered optimism about the outlook, noting the broader economy faces the wild cards of unpredictable trade policies, a shakier jobs picture and a softening in the global economy.
The Federal Reserve cut interest rates in September and additional reductions are anticipated before year-end, Fratantoni said. However, he cautioned that persistent inflation and budget deficit concerns will prevent long-term rates from falling substantially.
“While inflation is still above the Fed’s target, the job market has weakened, and we expect that the FOMC will continue to focus more on its full employment goal,” Fratantoni said, calling for a jump in unemployment from its current level of 4.3% to 4.7% by mid-2026 as hiring remains sluggish.
On inflation, Fratantoni warned that the Trump administration’s ongoing tariffs will likely be passed through to consumers, keeping price pressures elevated and limiting the Fed’s ability to cut rates aggressively.
Along with these challenges, MBA noted that increasing property taxes and home insurance premiums are adding to affordability headwinds.
Despite these issues, housing market conditions should see some slight improvements in the year ahead. The combination of slightly lower mortgage rates compared to recent peaks and flat home prices is offering some relief. Additionally, more housing inventory in certain markets in recent months should provide more options for buyers while moderating price growth.
“We expect that home sales will increase in 2026,” Fratantoni said. “The combination of lower mortgage rates and flat home prices has helped affordability conditions improve.”
On the business side, Marina Walsh, MBA’s vice president of industry analysis, highlighted that production profitability reached its highest level since 2021 in the second quarter of 2025, ending a prolonged stretch of losses. However, origination costs remain elevated and loan pull-through rates have declined.
“Many lenders are exploring ways to reduce origination costs and increase productivity through technology advances and process improvement,” Walsh said, adding that some firms may pursue consolidation to achieve scale.
Walsh noted servicing operations have provided crucial income stability, though rising unemployment could increase delinquency rates and associated costs. With homeowners sitting on roughly $36 trillion in equity, though, they have a “financial cushion” to weather potential hardships, Walsh added.
