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Jonathan Smoke, Chief Economist for Realtor.com, says although we had a strong housing market so far in 2106, the near future may not be so good (Housing).
The potential for a slight rate hike, or just the hint of one, coupled with a shrinking housing supply, may slow the pace of new home sales in the second half of 2016 into 2017.
With more people choosing to rent, especially the Millennials, the homeownership rate has dropped to its lowest levels since back in 1965. This, however, may open opportunities for lenders to finance more investment properties, as a new course of business.
Either way, through 2017 lenders may face some challenges with refinances diminishing from rising rates, and fewer home sales resulting from reduced inventory and rising home prices.
That means that every deal must count. Don’t waste time on loans that will not make it. Determine upfront which loans have a shot at approval, and streamline operations to get the approval quickly and to the closing table on time.
Technology will help make this happen, with online apps, early reviews, and timely pre and post close loan reviews. These will all help you stay on track to close the loans originated timely and ensure their purchase, and performance once closed.
Don’t go chasing rainbows. With fewer opportunities, carefully determine your production plans and your strategy and processes to achieve your goals.
Trained, knowledgeable staff, careful underwriting, complete documentation and legal compliance are the keys to success, in good markets and bad. Don’t sacrifice quality and compliance just to increase business. This will only lead to long-term problems.
BTW, according to Mr. Smoke, the future for housing, after 2017, still looks strong. Positive lift from a stronger economy, more jobs, better wages and the loosening of credit standards, coupled with the potential tailwind from Millennial buyers should help keep the market healthy for the next few years.
So, at least we that goin’ for us.
