"At the most recent meeting three weeks ago, my colleagues and I at the FOMC decided to maintain the target range for the federal funds rate at 5.25% to 5.5%," Jefferson told the Mortgage Bankers Association's Secondary and Capital Markets Conference in New York. "I believe that our policy rate is in restrictive territory as we continue to see the labor market reach a better balance and inflation decline, although nowhere near as quickly as I would have liked."

The housing sector is where most families make their largest investment and the price they pay for this can affect their overall well-being. But no one sector of the economy dictates Fed policy, and it acts in order with its Congressional objectives of maximum employment and price stability.

The Fed has made progress towards those dual mandates over the past two years, Jefferson said. But inflation still remains above the 2% target.

Economists at Bank of America expect the Federal Reserve's first federal funds rate cut to come in December of this year, Jeana Curro, managing director and head of agency mortgage-backed securities research, said in the session after Jefferson spoke.

The Fed has been mostly successful in engineering a soft landing, said Curro. That has led Bank of America to adopt a different perspective than it had the previous year.

BofA now calls for $1.6 trillion in originations this year, up from $1.38 trillion last year, and it expects $250 billion in net issuance of MBS in 2024.

The new-home sales market in particular will be strong, especially for builders who have their own mortgage lending operations and can offer attractive rates, Curro said.

During his part of the presentation, MBA Chief Economist Mike Fratantoni noted that while the Weekly Application Survey data was down 15% year-over-year last week, the Builder Application Survey, a monthly measurement looking at new home sales, was up 22%.

Thus for lenders who work primarily with existing-home sales, "this is still a very tough environment," but for those who focus on new construction, the current market is "pretty good," Fratantoni said.

Furthermore, it is the first-time home buyer that is making the new sales market right now. That's something builders are very aware of, he said.

"This first-time home buyer opportunity is being driven by the fact that there are 50 million people between 30 and 40 and they are going to be driving housing, divvying up all sides, rental and homeownership," Fratantoni said.

The organization's latest forecast calls for $1.8 trillion in volume this year, with the 30-year fixed to average 6.5% by the end of 2024.

For 2025, the MBA's outlook is for $2.08 trillion and for the following year, $2.28 trillion.

Refinancings should be 23% of this year's volume; the BofA forecast gives it a much lower share, at 15%.

The MBA's May forecast in only a slight tweak from its April projections. However, "this is down from the level of volume we were predicting at our annual conference last year to the early part of this year…just reflecting this less friendly rate path that we had seen based on the expectation of more slowdown in the macro economy that we've actually experienced," Fratantoni said.

A lot of speculation is going on right now about the direction of mortgage rates and every week the industry gets news of movement one way or the other, said Mike Fontaine, co-president and chief operating officer at Plaza Home Mortgage in an interview during the conference.

"There's not a clear direction, my belief is longer term we're going to see rates slowly decrease, but it's not going to be a straight line," Fontaine said. "We're going to have some bumps along the way."

Independent mortgage bankers are headed for their eighth consecutive quarter of net production losses, Fratantoni said in a preview of figures that are expected to be released later this week.

The net loss is expected to narrow in the final data to 25 basis points from 73 basis points in the fourth quarter.

Even though it is not an "official forecast," things should turn around profitability-wise in the second and third quarters, but it is "still a very, very challenging environment" for mortgage lenders, Fratantoni said.