Rising rates will be the top challenge facing mortgage executives next year.
They cited rates, 54 percent, as the top obstacle the housing market faces in 2019. Next were a lack of affordable housing supply, 37 percent, and government sponsored enterprise reform, seven percent, according to a survey from Genworth Mortgage Insurance of more than 200 executives that attended the MBA Annual Conference last month. The pending expiration of the qualified mortgage, two percent, was next.
For first-time homebuyers, the scarcity of affordable housing, 58 percent, will make buying a home difficult for them. “While rising interest rates and a lack of affordable housing supply continue to drive increase in home prices, first-time homebuyers have not wavered in their efforts to buy homes," said Rohit Gupta, president and CEO, Genworth Mortgage Insurance. "We continue to stress the importance of education and [options] for this demographic to set them up for success.”
Also, first time homeowners suffer from a lack of consumer knowledge, 20 percent, about the homebuying process, and rising interest rates, 13 percent, will be a drag on originations among this segment of the marketplace. The lack of an appropriate credit history, nine percent, is a lesser barrier to entering the market.
Other conclusions from the survey are as follows:
Technology is needed in loan application submission and closing process to improve customer experience:
Eighty-five percent of executives believe that integrating technology into the loan application submission process, 41 percent, and/or the closing process, 44 percent, will provide the strongest improvements in customer engagement. Also, respondents identified either the loan inquiry process or private mortgage insurance, 15 percent, as areas where technology could make a large improvement.
Borrowers' risk profiles see minor improvements:
While the housing market is expected to undergo some turbulence over the coming year, industry professionals are beginning to notice small improvements in the risk profiles of borrowers that want to enter the market. Of those surveyed, 41 percent, noted a small improvement in the quality of borrowers, while 53 percent, saw no change to a small decline, in their profiles. However, some identified an increase, 5 percent, in the risk profiles of applicants; just one percent reported a significant decline in risk profiles.
Regulatory won’t support increase in affordable housing:
When it comes to fixing the disparity in available housing inventory, a majority of mortgage executives, 62 percent, do not believe that regulatory policy changes introduced over the next 12 to 24 months will support the construction of more affordable homes, those priced at $300,000 or less. The shortage of affordable housing options identified in the survey as a significant hurdle for new homebuyers, as well as the overall success of the housing market in 2019.
