The Mortgage Bankers Association has forecasted a sharp rise in home purchases in 2017 and 2018. As a result, based on their most recent predictions, home purchase mortgage originations in 2017 will be about $1.1 trillion, growing to around $1.18 trillion in 2018. Great news for the housing markets!
On the flip side, as the purchase volume grows, the refinance activity slows. According to MBA, refinances in 2017 will dip to about $530 billion, a 40% drop from current levels. In 2018, refis are expected to be even less, projected to be about $410 billion. That ain’t such good news for lenders who have been feasting on home loan refinances for the past several years.
All in all, we’re looking at total mortgage activity in 2017 at about $1.63 trillion, and 2018 at around $1.59 trillion. Down a bit from the almost $1.9 trillion projected for the current year.
Although home purchase activity may be expected to rise, overall the mortgage opportunities may decline over the next few years.
All is not doom and gloom. Let’s face it, $1.6 trillion is a lot of mortgage lending. The questions are:
- Where will the opportunities exist?
- What type buyers will enter the markets?
- Is there sufficient affordable housing for new entrants?
BTW, it’s also predicted that rates will rise right through 2017. If lenders have learned anything it’s that every loan counts in a margin thin environment.
- How are you preparing for these changes?
- Can you service the new Millennial buyers, with their expectation of an online, real-time process?
- Can you service multicultural homebuyers and those whose primary language is not English?
- Are you still in contact with those Realtors and Builders who will be the ones controlling the increased home sales in 2017 & 18?
As if this isn’t enough, you need to get ready for the upcoming HMDA changes, the proposed updates/adjustments to TRID and Fannie’s new URLA. What’s a lender to do?
Take stock in what you now do, and how you do it, to determine what adjustments may be needed to service the purchase markets and related home buyers. What technology and/or resources are available to help you to reduce costs while increasing productivity? You’ll need to be lean and mean to compete and your loans need to be of high quality and legally compliant. Anything less just won’t cut it in the new purchase market.
Are you, and your originators, prepared to shed the refi mentality and go after the purchase market?