Lately, most of the reports concerning housing and mortgage lending have to do with the rise in mortgage rates since the election. Many believe that this may derail any potential housing recovery. It seems that prediction may be a little premature.
One of the challenges facing housing is the shortage of homes for sale, especially at the affordable end. This is due to the large number of refinances of existing homes which take them off the market and a slowdown in new housing starts. It looks as though that may be turning around.
New single-family home starts in October were at a rate of 869,000. That’s a 10.7% increase over September according to HUD. More remarkable is the fact that privately owned housing starts were at a seasonally adjusted rate of 1,323,000. Now, that’s a lotta new housing going on!
Coupled with this information is that, according to ATTOM Data Solutions – a leading supplier of Real Estate information, more than 13 million homeowners are now considered to be “equity rich.” This means they hold at least a 50% equity stake in the home they own. This represents more than 23% of all homeowners now carrying a mortgage. Nice potential for the move up buyers.
So, with all the doom and gloom resulting from the recent rise in rates, and the prediction for more rate hikes in 2017, comes some great news for mortgage lenders. There will be plenty of opportunities in 2017 for lending in the new purchase market.
A rise in rates signals a growing economy. A growing economy means more jobs and better wage growth. More homes on the market mean stabilization in home prices and a better opportunity for consumers to search, find and buy a new home. That all translates to more lending opportunities.
Lenders need to get ready to take advantage of these opportunities as competition will be fierce with refi’s declining. They need to be lean and mean, with the capability to do more loans with fewer expenses.
Now is the time to analyze operations to determine where things may be streamlined to improve performance while reducing expenses.
Don’t overlook training. Better trained staff results in better quality loans. Better quality loans translate into fewer delays, defects and delivery rejections. That all translates into better profits.
Are you ready for the new purchase market? Because things are looking up in housing.