MBA Economic and Mortgage Finance Outlook Prepared for MBA’s Annual National Convention October 25, 2016 Presented by Lynn Fisher, Mike Fratantoni, Marina Walsh Mortgage Bankers Association

Mortgage Bankers Association 12/6/2018 Summary of the MBA Outlook Source: MBA Forecast – October 2016 Mortgage Bankers Association

Historical and Forecasted Originations Mortgage Bankers Association 12/6/2018 Historical and Forecasted Originations 484 refi / 638 pur 570 / 801 42% 379 / 885 30% Source: MBA Forecast – October 2016 Mortgage Bankers Association

Rates Expected to Increase Source: Federal Reserve, Freddie Mac, MBA

Mortgage Bankers Association 12/6/2018 Potential for 16 Million Additional Households by 2024 Changing Demographics and Economy Plus Trends - 2.1 million +5.1 million +12.9 million 5.1 / -2.1 / 12.9 Over the next decade, demographic changes alone should account for 13.9 million additional households in the United States (see Tables). Adjusting demographic-specific headship rates from the 2014 levels to account for these long-term social and economic trends suggests even more robust housing demand over the next decade. If headship rates adjust and demographics changes continue, the U.S. will see 15.9 million additional households over the next decade – two million more than if headship rates remained at their 2014 levels.   Household growth will be led by 5.7 million more Hispanic households in 2024 than in 2014, 5.0 million more non-Hispanic White households, 2.4 million more Black households, 1.9 million more Asian households and 890,000 more other households. Growth will be driven by Baby Boomers, with 12.9 million more households age 60 and over in 2024 than there are today. Millennials will also be a key component of growth raising the ranks of households age 18 to 44 by 5.1 million. Generation X’s relatively small size means that there will be 2.1 million fewer households age 45 to 59 than there are today. Averaging 1.6 million additional households per year, housing market growth over the next decade would be among the strongest the U.S. has ever seen. Source: IPUMS CPS and MBA Mortgage Bankers Association

Strong Multifamily Development and Slower Single-Family Mortgage Bankers Association 12/6/2018 Strong Multifamily Development and Slower Single-Family Source: Census Mortgage Bankers Association

Changing Composition of Lending Institutions Mortgage Bankers Association 12/6/2018 Changing Composition of Lending Institutions Need to Update Source: HMDA Mortgage Bankers Association

IMB Net Production Income (bps) and Average $ Volume Source: MBA’s Quarterly Mortgage Bankers Performance Report, www.mba.org/performancereport

IMB Fully-Loaded Production Expenses ($ per loan): Source: MBA’s Quarterly Mortgage Bankers Performance Report, www.mba.org/performancereport

Three Things to Watch Source: FDIC, MBA Weekly Applications Survey

MBA Research Sign-ups and Services Mba.org/PerformanceReport Mortgage Bankers Association

Mortgage Bankers Association 12/6/2018 Contact Information & MBA Resources Lynn Fisher, Ph.D. Vice President & Executive Director of RIHA | Research and Economics 202-557-2739 lfisher@mba.org Mike Fratantoni, Ph.D. Chief Economist & Senior Vice President | Research and Industry Technology 202-557-2935 mfratantoni@mba.org Marina B. Walsh Vice President, Industry Analysis | Research and Economics 202-557-2817 mwalsh@mba.org MBA Research: www.mba.org/research RIHA: www.housingamerica.org Mortgage Bankers Association