Tag Archives: Mortgage Bankers Association

Mortgage Bankers Association Suggests Housing Market Improvement In Future

28 Aug

Following the worst years for the housing market that most Americans have seen in their lifetimes, the years ahead could actually bring some of the best years for the very same market.

Based on market cycles, census data and other study factors, the Mortgage Bankers Association (MBA) delved into the housing outlook over the next decade to find that “By 2024, demographic and economic changes will bring what could be one of the largest expansions in the history of the U.S. housing market — 15.9 million additional households.”

The findings were published by the MBA in a white paper this week noting the strong housing projections are driven largely by a shift in age cohorts, and that all sectors of the housing market stand to benefit.

The precise mix for rental versus purchase demand will depend upon consumer choices, relative costs and government policy, MBA says, but both will be promising.

“Households will compare the costs and benefits of owning and of renting, while housing developers and investors will respond to price and rent signals — each mechanism providing a release valve when pressure builds in a particular market,” MBA states in its findings. “…regardless of the mix [among rental demand and homeownership],demand for all types of housing will be strong.”

Relative to the aging demographic, in the coming decade, the Census Bureau projects there will be 20 more people who are age 60 or older, driving household decisions for older renters and homeowners.

View the full findings from the Mortgage Bankers Association.

MBA Significantly Increases Forecast for Home Purchase Lending

28 Jul

Purchase Originations Now Projected to Top $800 Billion in Both 2015 and 2016

WASHINGTON, D.C. (July 22, 2015) – The Mortgage Bankers Association (MBA) today released its updated mortgage finance and economic forecasts. The revision included a significant increase in the volume of purchase originations. MBA now projects that purchase originations will reach $801 billion in 2015 and $885 billion in 2016. That is an increase of $71 billion and $94 billion, respectively, over the association’s previous forecast.

Mike Fratantoni, MBA’s Chief Economist, along with senior MBA economists Lynn Fisher and Joel Kan, explained the drivers behind the increased forecast in MBA’s July Economic and Mortgage Finance Commentary, released today:

The housing market recovery has shifted to a higher gear. We have revised upwards our estimates and forecasts for home sales and home prices, and the cash share of purchases has declined.  All of these factors point to higher levels of purchase originations. Revisions to our purchase origination forecast in July result from changes in our expectations   about the rate at which purchase applications and housing sales translate into dollars of mortgage originations.

Overall, we believe that pull-through rates have increased, reflecting incremental but important changes in borrower behavior and lender underwriting practices, as well as changing average loan sizes and falling cash shares.  As a result of the changes outlined, purchase originations are now expected to increase to $801 billion in 2015, an upward revision from $730 billion in last month’s forecast, and from $638 billion in 2014. For 2016, we increased our forecast to $885 billion in purchase originations.

More sales are being financed, and more applications are being approved.  And we expect that this trend will continue into 2016 and beyond, as the broader economy and job market continue to improve.  The stronger job market and somewhat higher levels of inflation will lead the Fed to hike in September, and we expect that mortgage rates will hit 4.5 percent by the end of the year.  However, the positive of the stronger job market will outweigh any negative of somewhat higher mortgage rates.

The increase in rates will continue to nudge refinance volume down as expected.  Our forecast for refinance mortgage originations remains the same as last month. Refinances are expected to be $551 billion in 2015, compared to $484 billion in 2014. As a result, total originations are expected to be $1.35 trillion in 2015 and $1.26 trillion in 2016, compared to $1.12 trillion in 2014.

Click here to view a full copy of MBA’s July Economic and Mortgage Finance Commentary. Click here to view a full copy of MBA’s Mortgage Finance Forecast and click here to view a full copy of MBA’s Economist Forecast.

New Homebuyer Uncertainty

22 Jul

From the Reverse Mortgage Daily July 20th, 2014

Despite improving housing market conditions, young adults today are hesitant to become home buyers, further hampering the economic recovery, Bloomberg reports.

Even Sara Stevens, the 27-year-old daughter of Mortgage Bankers Association CEO David Stevens, says she’s not buying anytime soon.

“I watched cousins and other family members go through pretty tough situations in 2008 and 2009,” Sara Stevens tells Bloomberg. “I can’t tell you how many of them [my dad] tried to help get out of bad mortgages.”

Stevens and other millennials watched on the sidelines as family members experienced the effects of the collapse of Lehman Brothers, which triggered a financial meltdown six years ago. Because of this, Bloomberg reports, many young adults are more risk averse and view the potential upsides of status and wealth more skeptically than people did before the crisis, altering the homeownership calculation.

But now seems to be a prime time to invest in a home. Bloomberg data shows that from 1984 to 2014, interest rates have decreased from 13.9% to 4.1%; first-time buyers affordability index has increased from 64.9 to 116; mortgage payments as share of income has decreased from 28.2% to 14.2%; and unemployment among 24- and 25-year-olds has decreased from 7.9% to 6.9%.

Despite the favorable conditions, first-time buyers only make up 27% of the market, when historically the percentage has been closer to 40.

Uncertainty and doubt currently overshadow Millennials’ desire to become homeowners — what was once considered to be the “American Dream.” But until they decide to take the plunge, the housing market won’t quite recover.

“Without first-time buyers, current owners have a harder time selling and trading up, depressing the market and dragging down the economy,” Bloomberg writes. “U.S. homeownership fell for the ninth straight year in 2013, to 65.1 percent, according to the Commerce Department. The MBA is projecting sales will decline for the first time in four years.”

MBA Testimony to Financial Services Subcommittee: Steps to Strengthen FHA

17 Apr

On April 10, David H. Stevens, President and CEO of the Mortgage Bankers Association, testified before a House of Representatives’ Financial Services Subcommittee.  Mr. Stevens’ oral testimony was released by the MBA to its members.

Stevens highlighted the steps that FHA has implemented to address losses in its single-family portfolio, like raising insurance premiums and increasing down payment requirements.  He lauds FHA as “moving swiftly to protect taxpayers and the (MMI) fund,” while citing rising FHA average credit scores.  Stevens then outlines three priorities MBA identifies as necessary in future programmatic changes within FHA:

  1. Restoring financial solvency
  2. Preserving FHA’s critical housing mission
  3. Maintaining FHA’s countercyclical role.

Stevens also listed “a number of steps to further strengthen FHA and promote the return of private capital,’ such as lowering loan limits that were necessary at the height of the housing crisis and adjusting down payment requirements to mitigate risk factors like low credit scores.  He stressed the need to find the right balance of credit controls to offset risk.

Warnings abounded in regards to the restrictive influence of the fear of risk and subsequent attempts to reign it in. He paints the road to homeownership as wrought with challenges and says, “there may be families with good credit willing to put down substantial down payments that are being frozen out of the market because the risks of making any mistake are too great – and the rules of the road are unclear – and often contradictory.”  He warned of unrealistic requirements allowing only people with perfect credit to benefit from FHA’s programs, which would limit options for FHA’s actual target population.

The crux of Stevens’ statement was the need to clear up uncertainty in our real estate finance system. He added, “that includes not just FHA, but also examining the future of the entire housing finance system.”

Read the complete testimony here:


Hurricane Sandy Impacts Loan Pipeline

8 Nov

Mike Fratantoni, The Mortgage Bankers Association (MBA) vice president of research and economics,  gave figures for the impact week’s storm had on application volumes on the East Coast.   “Applications fell more than 60% compared to the prior week in New Jersey, almost 50% in New York and nearly 40% in Connecticut,” he said.

The decline spans refinances and purchases, according to MBA’s weekly mortgage applications survey published Wednesday.

Sandy forced shutdowns of many lenders and third party services, some of which are still not back  up to normal operations following the winter storm yesterday, having suffered power and telephone outages.  Tradition Title Agency has remained open throughout, offering assistance to lenders and clients in the storm-battered areas.

Since many borrowers’ homes are now in need of reappraising to assess the damage caused by Sandy, lenders are standing by until all disasters have been declared by the Federal Emergency Management Agency (FEMA).

The process, which lenders expect to be a long one involving contacting each borrower to schedule re-inspections.  Loans will close once appraisers visit homes and assess the damage–if any–to the properties.

Lenders and service providers are working hard to get their pipelines back on track and close loans as soon as possible.

Some Promising Numbers

23 Mar

Mortgage rates dropped slightly this week after an uptick of just under ½% in the last two weeks. The recent rate increase, however, immediately impacted activity in the housing market. The Mortgage Bankers Association reported that for the prior week, applications for home purchases declined by 1.0%. The big impact of the rate increase was felt in the refinance index which dropped 9.3%.

The Housing Market Index, which measures the confidence reported by the National Association of Home Builders, is at the highest level since the start of the recession. Home builders are indicating that they are expecting significant growth in new construction in the coming months. Although housing starts dropped slightly after January’s very strong report, the good news is that permits for new construction are continuing to increase which is evidence of the builder’s sentiment on an improving real estate picture.

Existing Home Sales dropped just under 1.0%, however this report comes after January’s upwardly revised jump of 5.7%. Compared to last year, existing home sales are up 8.8%, making us optimistic that housing is on the mend.


31 Oct

lAST WEEK, the Mortgage Bankers Association said the refinance index climbed 4.4% from the previous week, while the seasonally adjusted purchase index jumped 6.4%.

Mortgage applications rose 4.9%.  Refinancing applications accounted for 77.3% of this activity.

The average interest rate on a 30-year, FRM backed by the FHA fell to 4.11% from 4.12%, while the 15-year, FRM increased to 3.62% from 3.61%.

In addition, the average contract interest rate for 5/1 ARMs increased to 3.11% from 3.08%.


The House Financial Services Committee Set to Examine New Compensation Rule

16 Feb
Members of the Committee on Financial Services...

Image via Wikipedia

The  Financial Services Committee will look at implementation of the Federal Reserve’s rule that changes the compensation model for mortgage originators prior to the effective date of April 1.  The committee said it’s concerned the rules may have an adverse impact on the ability of small businesses that originate mortgages to remain in business.

Drafted earlier this year, the Fed’s rule is designed to prevent compensation based on a loans terms or conditions and to prohibit steering a consumer into a higher rate to receive additional compensation.  The Mortgage Bankers Association joined other trade groups in asking the Fed to delay the implementation of the rule. 

“The Rule is far-reaching and requires major changes to long-operating compensation practices that heretofore have been both legal and prevalent,” said the MBA. “Unfortunately, in our view, the Rule does not definitively address many matters of particular importance, and has engendered numerous questions from creditors and loan originators seeking to comply.”

The National Association of Mortgage Brokers praised the committees decision to look into the proposal.  The association argued that mortgage brokers and lenders are ill-equipped with how to fully comply.

adapted from Reverse Mortgage Daily