According to Lynn Fisher, MBA’s Vice President of Research and Economics, new housing starts should increase about 10% in 2017 and just a bit less in 2018.
The effect should be to slow the rising prices for existing housing, helping more consumers realize their American Dream.
The MBA forecasts that mortgage debt in the US will increase in 2018 to $10.1 trillion; up from the 2016 level of $9.7 trillion. This is primarily the result of increases in home purchase financing.
Rising mortgage rates will be offset by increased consumer employment and wage growth, spurred by a stronger economy. Let’s all hope so!
As a byproduct of the increasing rates, mortgage costs and home prices, we may see a return of the adjustable rate mortgage (remember them?) to assist homebuyers in their new purchases.
In addition, although refinancing may be down, home equity is greatly improved. Some existing homeowners may still choose to pull some of that equity to pay down existing high rate debt or finance overdue improvements.
So, all is not doom and gloom for lenders in 2017 and 2018. Opportunity exists with home purchase loans projected by the MBA to increase by about 10% year. The MBA believes that higher rates and financing costs will not deter new home buyers, as long as they can find reasonable financing tools.
As always, good lenders will find the products and services needed to continue to finance the American Dream.