NEW YORK (TheStreet) -- The Mortgage Bankers Association on Tuesday lowered its forecast for mortgage originations in 2014 by $57 billion to $1.12 trillion, based on declining mortgage application activity.
"Despite an economic outlook of steady growth and a recovering job market, mortgage applications have been decreasing - likely due to a combination of rising rates and regulatory implementation, specifically the new Qualified Mortgage Rule," said Mike Fratantoni, Chief Economist for MBA. "As a result, we have lowered our expectations for both purchase and refinance originations in the first half of 2014."
Home purchase mortgage originations are now projected to come in at $677 billion for 2014, compared to the earlier forecast of $711 billion. The projected purchase originations would be 3.8% higher than that recorded in 2013.
Refinance originations are now expected to total $440 billion during 2014, down from the earlier forecast of $463 billion. The latest forecast is 60% below 2013 refinance originations.
Origination and application volumes have been declining over the last six months after long-term interest rates rose more than 100 basis points off their lows in May.
The refinancing boom that propped banking results in the years following the crisis appears to have come to an end.
JPMorgan Chase (JPM) and Wells Fargo (WFC) reported fourth-quarter results on Tuesday. JPMorgan saw mortgage originations drop 54% from a year earlier and 42% from the previous quarter to $23.3 billion. Purchase originations at the bank was up 6% from a year earlier, but it was down more than 30% from the previous quarter, suggesting that rising interest rates were hurting applications for new mortgages.