With elections looming in the not too distant future and a Republican held Congress with a Democrat as President, it looks as though we may not see any major changes from Washington. That could affect housing policy (Policy).
The Fed says that they will not do anything radical with rates, basically continuing their wait and see approach. Janet Yellen did hint at a rate hike if and when the economy appears to move in the right direction. But, when might that be?
It looks as though we’ll bump along in the present rate and in the current regulatory environment. Congress has their hands full with other pressing issues like immigration reform, funding Homeland Security and ISIS. As these issues take precedence, at least for now, housing takes a back seat
That being the case, we have a pretty good idea of what to expect in 2015 and probably 2016 as well. It doesn’t look like we’ll see any major changes with QM or ATR, especially with the focus being on the new TRID rules coming in August.
The recent changes in Agency LTV limits and the FHA premium cut may help homeownership some but, initially, it looks as though it is spurring more refi’s than purchases. That may put some money in some lender’s pockets for now, but will it help housing, in the long run.
The only thing that is going to get housing and lending back on track is an improvement in the economy. That is dependent on jobs and income growth. Regardless of low rates and creative products, consumers will not enter, or re-enter, the housing market until they are comfortable that can afford it, long term.
That means having confidence in the job they have, or get and the continuance of the income stream it may create. Young people need such jobs and income to both afford a home and to pay off their highest for any generation, student debts.
I think we need to look to technology, training and quality. I’ve said it all along. Times are changing. If we’re not going to see any major changes in housing policy then it must the lenders who make the changes to how they do their business.
Lenders need to find ways to do more loans, from a smaller pool, and make more money from each loan they close. There is no magic wand or pot of gold at the end of the rainbow. Those lenders, who understand the current regulatory environment, learn to service today’s buyers with technology, and produce a quality product from a borrower with the ability to repay can still survive in a stagnant housing market.
If it’s going to be more of the same, where do the lending opportunities come from? How will lenders cope with the rising cost of producing a loan, increased competition for those loans, and the increased risk if they decide to venture outside the safety of the QM box? Answers to these questions may determine a lender’s future. What’s your plan?