According to a recent Fitch Ratings report, we should be seeing more buyers in the upcoming months. This due, in part, to a steady easing of credit underwriting standards by banks and independent mortgage lenders, coupled with certain other factors (Buyers).
The easing of credit standards, coupled with historically low interest rates, the slowing in the rate of home price increases, FHA’s cut in their annual premium and the agency’s low down payment loans, all bode well for those seeking home financing. These factors should help bring more home buyers into the market, including many Millennials who have been sitting on the fence. I believe 2016 may the year they take the plunge. This is great news. Are you prepared?
There are plenty of potential buyers. The challenge is to provide them with affordable housing and financing options. The other thing is to ensure that these new buyers have the financial ability to not only repay the debt but also to continue to afford and maintain the home they purchase. This is critical to sustaining any housing and economic recovery.
It becomes a balancing act. As more buyers enter the market and buy and finance homes, the economy will improve. As the economy improves, more homes should sell. The more homes that sell, the home values will start to increase. As the economy improves, rates may start to rise. All this may make it more difficult for future first-time buyers to find affordable homes and financing. Fewer first-time buyers mean fewer second-time buyers, and so on.
As housing goes, so goes the economy, so it’s important to have a steady controlled growth in both. This can be done through prudent lending, creating quality loans which will perform as expected – making for good investment options.
The new TRID rules should help. These will provide consumers with more information about their loans and the process. If used properly, they will also assist lenders in making better quality loans to better-informed consumers. Take full advantage of the upcoming TRID changes, train your originators and support staff in the information being disclosed to the consumer and how it can help to provide better service and manufacture a quality loan.
More business is coming. Are you prepared to take advantage of these opportunities? Do you have the systems in place with trained staff? Will you create quality business with increased profits or just more loans with increased risk?