This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Mortgage Originations Seen Dropping 30% in 2014

NEW YORK (TheStreet) -- Mortgage origination volumes could fall as much as 30% in 2014, driven by a dropoff in refinance activity as mortgage interest rates rise, according to a report Tuesday by KBW analysts Bose George and Jade Rahmani.

The analysts forecast residential mortgage origination volume of $1.15 trillion in 2014, down from almost $1.8 trillion in 2013. That is slightly lower than the Mortgage Bankers Association's forecast of $1.2 trillion.

Purchase activity, however, is expected to be strong with a growth of more than 10%.

Increased competition for business should also pressure gain-on-sale margins, the spread that lenders earn from selling mortgages in the secondary market. KBW expects margins to decline by another 15% in 2014.

The outlook for the mortgage sector as a whole is mixed. "We generally expect declining earnings from the mortgage originators and title insurers, more stable earnings from the mortgage servicers and increasing earnings from the mortgage insurers," the analysts wrote.

KBW is positive on mortgage insurers including Radian (RDN), MGIC Investment (MTG) and Essent Group (ESNT), which are poised to benefit from the continuing shift away from the Federal Housing Administration. It is also bullish on holders of mortgage servicing rights such as Home Loan Servicing Solutions (HLSS)and New Residential Investment Corp (NRZ).

It is neutral on mortgage servicers including Ocwen (OCN) and mortgage banks, with the exception of Penny Mac Mortgage Investment Trust (PMT), on which it has an outperform rating based on valuation.

KBW also continues to believe the common shares of Fannie Mae (FNMA) and Freddie Mac (FMCC) are worthless and that housing reform is unlikely until at least 2015.

-- Written by Shanthi Bharatwaj in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs