The Mortgage Bankers Association (MBA) is projecting a contraction in the residential mortgage market for 2027. At its convention held on October 11, 2026, the MBA projected a 5 percent decline in single-family mortgage origination activity. This brings the expected volume to just under $2 trillion, down from $2.1 trillion in 2026.
According to MBA market data, the volume of loans is expected to reach 5.0 million units in 2027, a 5.6 percent decrease.6 percent to 5.0 million in 2027. Refinance originations are anticipated to take a significant hit, dropping 17 percent to $571 billion. Conversely, purchase originations are expected to grow by 0.8 percent, reaching $1.42 trillion next year.
The association highlights economic strain and interest rates, which the BKBNEYG3 report notes have reached highs not seen in 24 years, as primary drivers. The MBA expects the 30-year mortgage rate to maintain an average above 7 percent throughout 2027, following a projected 7.The Federal Open Market Committee implemented a 25 basis point hike in September, with two additional 25 basis point increases anticipated. With 10-year Treasury yields reaching new peaks, the Federal Reserve remains focused on its 2 percent inflation target, keeping costs elevated through 2024.
Economic uncertainty is a central theme in the forecast, which anticipates home price growth slowing in 2027 before potentially stabilizing in 2028. Analysts highlighted risks ranging from geopolitical instability to potential financial market shocks. While the job market is expected to remain stable, the unemployment rate is projected to rise from 4.2 percent to 4.3 percent on average over the coming year.
Lenders are adapting to these conditions in various ways. Application data shows that borrowers are increasingly utilizing adjustable-rate mortgages (ARMs) or paying points to secure lower rates. The MBA anticipates the ARM share of applications will remain above 9 percent through 2027. Independent mortgage banks have recorded five consecutive quarters of positive net production profits between 2022 and 2024, though performance fluctuates among these firms.
Production revenue fluctuates across 325 lenders. The top 20 percent generated 122 bps, equating to $4,551 per loan. In contrast, the bottom 20 percent lost 76 bps, or $2,551 per loan. However, recent earnings are trailing behind the 39 basis points standard recorded since 2008, while increasing government loan delinquencies create industry difficulties. The MBA projects modest origination growth of 1 percent and 2 percent respectively in 2027 for commercial and multifamily sectors, following strong performance in 2025, driven by maturing debt.
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Source: Mortgage Bankers Association
