If you ask, I’ll bet you’ll get quite a different outlook from liberals and conservatives.
Based on some recent surveys and indicators, the same is true. Let’s look at Fannie’s Home Purchase Sentiment Index (HPSI) that measures consumer’s outlook for housing:
- Overall, the index dropped 2 points in December
- Those saying, “now is a good time to buy” declined by 5%
- Those saying, “it’s a good time to sell” stayed flat. But, it is up more than 20% from a year ago
- Respondents are thinking “home prices will rise” declined by 2%
- Consumers “not concerned about losing their job” dropped by 6% , and
- Those thinking “rates will decline over the next year” decreased by 1%
- Yet, those reporting “their income is significantly higher” rose by 2%
Although consumers are making more money, slightly more are concerned about losing their job, some believe home prices will decline but that rates may rise. In the end, more respondents believe that now is “not a good time buy.”
Based on MBA’s Mortgage Credit Availability Index (MCAI), we find:
- Overall mortgage credit availability declined in December by 1.8%
- Conventional MCAI fell by only .7%;
- Government dropped by 2.6%
- Jumbo loan credit availability decreased by 1.4% while conforming was only off by .1%
- Overall Jumbo MCAI increased over last year by more than 20% (more non-QM options)
A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit.
The index was benchmarked to 100 in March 2012. It now sits at 179.2, indicating that consumers outlook is still quite positive.
In a prior blog (It’s Not The Temperature That’s Been Dropping), I mentioned that mortgage loan credit scores are declining, indicating that more lenders may be loosening credit standards. Go figure.
So, which is it? Are consumers more bullish or bearish on housing? Housing demand is up, resulting in higher home prices but more equity for existing homeowners. The economy is improving, unemployment is down.
We are seeing more jobs with better wages and potential for wage growth, with tax reforms leaving many with more take-home pay. How will this all influence mortgage rates and housing?
It all depends on how you see the play and which team you cheer. If you’re a Georgia fan you saw an interception to stop an Alabama drive late in the game. If you’re for Alabama, it was clear the ball hit the ground. All in the eye (or mind) of the beholder.
How do you see 2018 shaping up? Will it be good for housing and mortgage lenders? I believe so.
Opportunities for lenders will continue. It’s a matter of being prepared, trained and in the right position to make the call.