Key Points
- Bank of America projects 2027 mortgage originations at $1.719 trillion, with only $344 billion coming from refinances.
- The bank's forecast is driven by weaker housing market conditions, home sales, and elevated mortgage rates.
- The 2027 forecast is the third major call for origination volume to remain below $2 trillion next year.
Why Bank of America Sees a 2023-Style Housing Market Replay
Bank of America projects muted mortgage growth in 2027, with total originations reaching $1.719 trillion and only about $344 billion coming from refinances. The bank's analysts expect weaker housing market conditions and home sales, along with elevated mortgage rates, to drive this forecast.
The bank's 2027 forecast is the third major call for origination volume to remain below $2 trillion next year. This is driven by softer home sales, a higher share of all-cash transactions in a high-rate environment, and more agency collateral flowing into nonagency securitizations.
At a Glance
| Mortgage Volume | $1.719 trillion Bank of America's 2027 forecast |
| Refinance Volume | $344 billion Expected contribution to total mortgage originations |
| 10-Year Treasury Yield | 5.25% Average projected rate for 2027 |
| Existing Home Sales | 2.5% year-over-year decline Projected change in sales volume |
| New Home Sales | 0.5% increase Projected change in sales volume |
| Home Price Appreciation | 1% rise Projected change in home prices |
Behind the Bank of America Mortgage Forecast
Behind the Bank of America Mortgage Forecast
The bank's forecast assumes a 10-year Treasury yield average of 5.25% in 2027, a 2.5% year-over-year decline in existing home sales, an 0.5% increase in new home sales, and a 1% rise in full-year home price appreciation.
The bank frames 2027 as a replay of 2023 in several key respects: elevated mortgage rates, subdued housing activity, affordability challenges, and a persistent lock-in effect. However, the analysts argue that 2027 could be 'even more challenging' than 2023 because several demand-supportive forces have faded.
What to Expect from the 2027 Housing Market
What to Expect from the 2027 Housing Market
Homebuyers and sellers should expect a 2023-style housing market in 2027, with elevated mortgage rates, weak refinances, and subdued sales. The lock-in effect has eased modestly at the market level, but housing supply conditions have improved compared to the tightest pandemic-era levels.
Some large markets, including parts of Florida, are showing localized signs of recovery. However, the reversal of the work-from-home trend has removed a major tailwind that boosted housing demand during and after the pandemic.
Risk & Opportunity Assessment
| Commercial Risk | Medium | Weaker housing market conditions and elevated mortgage rates |
| Competitive Risk | Low | No significant changes in the competitive landscape |
| Regulatory Risk | Low | No major regulatory changes expected in 2027 |
| Reputation Risk | Medium | Potential for negative publicity due to elevated mortgage rates and weak refinances |
| Technology Disruption | Low | No significant technological disruptions expected in the mortgage industry |
| Commercial Opportunity | Low | Limited opportunities for new business models or revenue streams |
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