Those who keep a close eye on the mortgage industry have likely been more than a little bemused about the developments seen in the past several months, as originations have slowed to a trickle despite a relatively small increase in rates and prices. But now experts warn that both could continue to increase, potentially more significantly, before the end of 2014 and into 2015, and that could cause more appreciable problems.

The famed banking analyst Dick Bove recently warned his clients that a sharp uptick in mortgage rates over the next several months could mean that fewer consumers attempt to either make a purchase or refinance their existing home loans, according to a report from CNBC. That, in turn, would be potentially crippling for the mortgage industry, which has already seen a significant slowdown even as affordability remains quite high in comparison with historical norms.

If mortgage buyers, specifically, stop seeking the 30-year fixed-rate loans that are typically used in purchases, that could mean that it's harder for everyone to obtain approval for a mortgage going forward, the report said. That's because banks will have less money in their mortgage businesses overall, meaning that there are fewer buyers. Consequently, home prices could drop, creating problems for current owners.

What else might happen?
Further, mortgage rates are likely to rise considerably as the Federal Reserve Board continues to wind down its quantitative easing efforts which have kept terms depressed at or near all-time low levels for years, the report said. And when adding in increased lender skepticism about the market overall – which might have had to include broadening standards to those with lower incomes or credit ratings to keep the business afloat – that likely means that the housing market could be in for a long, cold winter that doesn't improve much even by this time next year.

"While these banks are not willing to make public statements similar to those of the industry's leaders, they all agree that the risk in making loans to low-income households is too high," Bove wrote in a note to his clients, according to the news network. "The fines, lawsuits and put-backs associated with those loans make them unprofitable."

As a result of these looming negative conditions, mortgage professionals will likely have to do more to encourage activity now, before affordability starts to decline significantly. Highlighting the relatively low rates and home prices available now, and explaining how they're not going to last long, might help get more shoppers involved.