The survey results indicate that we’ll see the first-time home buyer segment of home purchases growing at a faster pace than other home sales.
According to respondents:
- 57% see the first-time buyer’s market increasing
- 31% say it stays about the same
- 12% think it will decrease.
This is some good news for mortgage lenders positioned to service these buyers and those ready to service their move up buyers as well.
However, these first-time buyers will face some hurdles to market entry. Led by a lack of available affordable housing, rising interest rates, and a lack of any sizable down payment.
Some of these challenges may be overcome with the recently introduced innovative low-down payment and expanded credit criteria lending programs now available.
Such programs accept higher LTVs, lower credit scores, and alternative sources of income. All which also present some new challenges to lenders.
These eased credit standards put more of a strain on lenders when originating, underwriting, and closing these loans.
Lenders must be careful to collect all the information and analyze it carefully to ensure the manufacture of a loan of good quality while ensuring compliance with all lending laws, and the new secondary marketing requirements. You just can’t be too careful these days.
It’s important that you educate these new buyers to fully understand their responsibilities of home ownership and for the repayment of the mortgage obligation.
Originators and support staff need to be well trained to service the specific special needs of the first time and low to moderate income buyers. These buyers will need some additional hand-holding.
Remember, they’ve never been through this process before and have no point of reference for moving forward. Their success as homeowners is dependent upon how well they are prepared for what is to come. It may take a little more effort, but in the long run, that extra effort will be well worth it.
It’s time to go back to old school lending. Know and understand the wants and needs of the consumer and be prepared with the products and service needed to meet those needs.
This, coupled with the collection and reporting of the new required HMDA data, is a major challenge for lenders in 2018.
Those who have the needed products and trained staff, supported by new technology that will help them to reduce time and expense, will be the ones to take advantage of the fewer lending opportunities in 2018. Others will continue to chase refis and hope for the best. Which one are you?