2019 is going to be an interesting year for home buyers. High-dollar regions like the Bay Area, NYC, and other financial hubs show signs of slowing down. In less dense/regulated markets home builders are adding more inventory which should stabilize or lower prices in smaller markets. Lenders are under pressure from shareholders to reduce barriers to entry for home buyers, which will also have a positive effect on the ability for consumers to obtain home purchasing/refinancing credit. This credit easing is largely due to the fact that many experts are predicting double-digit declines in the larger housing market.
By all accounts, the housing market is shifting into a different gear in 2019. The nation's economy remains strong, unemployment is at a record low and wages are increasing. Nonetheless, mortgage origination volume is shrinking, so lenders will need to fight harder for a smaller piece of the pie.
This past fall, Fannie Mae's Mortgage Lender Sentiment Survey found that lenders reported a net negative profit margin outlook for the eighth consecutive quarter. Competition among lenders was cited as their biggest challenge.
In a tight market, an obvious strategy is to find a way to generate more repeat business, whether that’s for home equity products, refinances, or purchase loans. One of the best ways to accomplish this is to partner with appraisal providers that are just as dedicated to providing an excellent customer experience as you are.
Because they usually have limited contact with appraisers, consumers often feel detached from the appraisal process. This is not a problem when appraisals go smoothly, but very annoying to the consumer when they don’t.
It’s no secret that loan production costs are among the highest our industry has ever seen. But with a more modest purchase market on the horizon, rising costs have become particularly stressful to bear.
Of course, the primary driver of high loan costs is the length of time it takes to close a mortgage loan. And because it is one of the most time-intensive components of the mortgage process, the appraisal is a major factor in controlling costs. Appraisal problems have been known to delay closings and occasionally derail deals altogether, adding greater costs that lenders cannot afford.
At the same time, diminishing home values, new appraisal exception rules and in some cases, a shortage of appraisers in certain markets are creating problems of their own. Collectively, these factors can and have been known to have an adverse impact on appraisal quality.
With all of these things going on, how on earth can lenders improve valuation quality while reducing costs next year? Rest assured, it can be done. Here’s how.
As the housing market heads into semi-hibernation for the holidays, it’s a perfect time to start planning ahead. Between rising rates and potential price ceilings in a growing number of local markets, there are a lot of challenges in 2019 that beg our attention.
One particular trend we have been gearing up for is the increase in demand for HELOCs. The rise in home values and a strong economy are driving demand for home equity loans, especially lines of credit. HELOCs in particular could surge in the coming year, according to a recent TransUnion study that found home equity levels have surpassed their previous peak in 2006.
The success lenders have in capitalizing on these products will have a lot to do with having the right valuation strategy in place. Here are the three things they’ll need most.
Jason Kitch will lead growth for the firm in the Northeast region
Toledo, Ohio &ndash; November 15,