Home Purchase Sentiment is Down

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With Brexit, mortgage rates have fallen to their lowest levels. Also feeding this decline is the lack of growth in the economy. This presents us with yet another good news; bad news scenario.

Fannie’s latest Home Purchase Sentiment Index dropped 2.1% from last month. Overall, this index is now down 1.5% since last June.( Sentiment )

This means that people have a poorer outlook on their potential to buy a home. Why? Concerns over employment, income, and the general condition of the economy to name a few. Not so good.

However, other sectors fared a little better. Those who think “now may be a good time to sell a home”, and those who believe “it’s time to buy”, increased. While a larger percentage believe that home prices may not increase.

All in all, this is not a glaring endorsement of the economy. This presents some unique challenges to lenders.

so it is important that they are aware of the benefits of homeownership and all the programs now available to help them own a home.

Unfortunately, some of their perceptions are driven by a belief that they still need at least 20% down and a 720 credit score. These myths must be debunked. Otherwise, we’ll continue to see fewer and fewer buyers entering the market.

As I’ve said before, low rates alone won’t do it. Now is he time to get aggressive and go after new business. Don’t sit back and play the refi game. Like the low rates, these may not last forever.

The game has changed. Play different.

About the Author

Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.