As a followup to a great contribution by our talented and significantly experienced Chief Credit Officer – Gerry Glavey on “The Up’s and Down’s of Agency Mortgage Insurance Fees, Guarantee Fees and Funding Fees.”
I had the opportunity to listen to Ginnie Mae President, Ted Tozer, speak this week in California. He stated that indeed FHA lending is on the rise and, in fact, it has surpassed Fannie and Freddie originations last month and the trend continues.
Other lending trends and observations from my regular research and conference attendance:
- Rental vacancies are down as millennials, in particular, are renting and rents are rising. Thus, making renting more expensive than buying.
- Rates are expected to rise as we approach and move into 2016. For those who have the means – the time to consider purchasing vs renting is now. Rates will remain relatively low given history so no need to panic; but, don’t expect the bottom like it has been!
- The Latino market is the fastest growing demographic sector in the US. The mortgage industry better find a way to understand their culture and modify underwriting practices to accommodate their version of household income. With respect to Latino American Citizens, this is a stable base of family oriented, spiritual, hardworking people that deserve the dream of homeownership in America – they are a big part of our future and we better figure out a way to help them to succeed.
- Jobs/unemployment still remains an issue and, in my opinion, have to be addressed before we significantly move the needle on housing and give people confident to take the housing plunge.
- As well as being burdened with College Debt, the millennials are generally mistrusting of the mortgage process and mortgage banks. The fact is that the lending industry is cleaner than it ever has been and the bad apples have largely exited. This is a great industry not only to lend you money for your first house; but to also provide you a lucrative career. The secret on both counts is doing your research and finding a good lender – believe me there are plenty of fine lending institutions out there. Don’t let the headlines scare you!
Credit standards are loosening a bit, particularly with smaller lenders, as large banks continue to reduce their market share due to regulation and the need to balance capital usage and risk reserves. Overall credit underwriting remains too tight and is locking good people out of the dream of homeownership.
The mortgage / housing industry is in transformation and no better time to get involved especially as a young person starting their career.
Lots more progress to make; but, in general heading in the right direction.