Higher rates, alternative products pose challenges to mortgage market in 2018 – survey

by Francis Monfort12 Jul 2018

Mortgage industry professionals said that rising inflation as a trigger of higher interest rates was the biggest challenge facing the market this year, according to survey results released by Genworth Mortgage Insurance.

Forty-nine percent of 105 mortgage industry professionals surveyed at the Mortgage Bankers Association's National Secondary Market Conference & Expo in New York City cited inflation as a concern.

The survey also found that 30% of respondents said the re-emergence of alternative mortgage products will put pressure on the market this year. Other issues challenging the industry are the loosening of credit standards (17%) and the excess liquidity in the market (4%).

To improve access to credit in the mortgage market, Genworth said that 44% of industry executives think legal uncertainty for lenders originating FHA loans should be removed. Additional data also show that 30% of executives think lower compliance cost for lenders would improve access. The adoption of alternative credit scores (14%) and more ambitious affordable housing goals for the GSEs (12%) were also cited by respondents.

"Rising interest rates and inflation, when combined with today's inventory shortage, are accelerating home price appreciation, causing some lenders and consumers to explore less-tested methods for financing home purchases," Genworth Mortgage Insurance President and CEO Rohit Gupta said. "Despite this, private mortgage insurance is experiencing another strong year, particularly among first-time homebuyers, as the majority of consumers and lenders still prioritize financing solutions backed by tested, well-capitalized businesses."

Inquiring into industry sentiment on certain issues, Genworth Mortgage Insurance also found that industry professionals are in agreement that compensating factors should play a role for borrowers above 45-DTI. Also, the survey found that a majority of respondents seek easily customizable dashboards for LOS platforms and have started to incorporate GSE Day One Certainty tools.


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