Despite rising interest rates, some to their highest point in seven years, there should be plenty of mortgage money to go around this year, according to a new, quick-hitting survey of major lenders by Magilla Loans.
Nearly nine out of every 10 lenders polled said they expect to lend more in 2018 than they did in 2017. Moreover, three out of 10 said they were going to loosen their underwriting criteria this year. Less than one in 10 said they would be tightening.
Even a recently lowered lending projection by the Mortgage Bankers Association (MBA) shouldn’t cast a pall on the optimism; rather, it should be taken as something of an anomaly, said MBA economist Joel Kan.
“We lowered our estimate for first quarter 2018 purchase originations slightly as data on home purchase applications over the holiday season came in lower than expected,” Kan told Inman News. “However, this is typically a very unpredictable time of the year, and we have already started to see some bounce back in purchase applications.”
Even with the revision, the MBA is still looking for $1.18 trillion in purchase money mortgages this year, $1.25 trillion next year and $1.32 trillion in 2019. In 2017, lenders wrote an estimated $1.11 trillion in purchase financing, by the MBA’s count.
Will spring homebuying season come early?
Mike Fratantoni, the MBA’s chief economist, projects a slow but steady gain in purchase origination growth. “We expect this growth to continue over the next few years,” he said at the group’s Independent Mortgage Bankers Conference last month in Amelia Island, Florida. “We could see an early start to the spring homebuying season.”
At the same time, financing giant Fannie Mae, which doesn’t make loans directly but buys them from lenders to keep the money flowing for home loans, is forecasting $1.2 trillion single-family purchase originations this year and $1.24 trillion for 2019. And Freddie Mac, Fannie’s chief rival in the so-called secondary market, says loan volume could be as much as $1.7 trillion this year and $1.8 trillion next year.
Early returns for January show that loan applications continued to increase vigorously after the Christmas and New Year’s lull, according to MBA.
The MBA’s Market Composite Index, a measure of loan application volume, dipped slightly in the last full week of January after increasing significantly in the previous weeks.
The 2.6 percent slip followed a 4.5 percent gain on a seasonally adjusted basis during the week ended Jan. 19. And that gain came on the heals of 8.3 percent and 4.1 percent increases in the first two weeks of the year, respectively.
The latest seasonally adjusted Purchase Index decreased by 3 percent from the week earlier. But again, that came on the heels of four straight weekly increases, and the biggest jump since April 2010 nearly eight years ago. Also worth noting: the MBA’s unadjusted Purchase Index increased by 15 percent compared to the previous week and was 10 percent higher than the same week one year ago.
‘Nearly all lenders will be more aggressive in 2018’
Meanwhile, in the survey of 200 lenders, including the likes of Wells Fargo, Bank of America, TD Bank, PNC and US Bank, 88 percent said they would boost their loan volumes this year. Only 12 percent said they wouldn’t do so. The respondents were split almost evenly about the impact changes made to the federal funds rate by the Federal Reserve Board would have on how much they lend, with 56 percent saying it would have an impact and 44 percent saying it wouldn’t.
The survey was conducted by Magilla Loans, a relatively new and little known search engine for loans which launched in September 2015 and connects borrowers to banks without requesting personal information. The platform enables borrowers to search and compare loans without providing a name, social security number or phone number.
Asked if they would be tightening or loosening their requirements for approving loan candidates, 66 percent said they intended to keep their guidelines as is, while 36 percent said they’d open the spigot. Just 8 percent said they expect to batten down the hatches this year.
“Of the emerging trends disclosed in the lender survey, the most prominent is that nearly all lenders will be more aggressive in 2018, pointing to a positive inflow of residential and commercial loans across the United States,” said Dean Sioukas, CEO of Magilla, which claims to have already channeled billions of dollars in loans through its website in its relatively short existence.
As far as rates are concerned, the latest MBA weekly survey finds that they are creeping up. Indeed, rates for all loan products rose, some to multi-year highs. Here’s a sampling:
For conforming, 30-year fixed-rate loans, the rate increased from 4.36 percent to 4.41 percent. That’s only a 5 basis point increase, but 4.41 percent in the highest rate since March 2017, almost a year ago.
For jumbo fixed loans above the new $453,100 threshold, the rate also was the highest since last March, rising from 4.31 percent to 4.34 percent. And for 30-year FHA loans, the latest rate is 4.4 percent, up 9 basis points from the previous week and the highest point since September 2013.
Lew Sichelman’s weekly column, “The Housing Scene,” is syndicated to newspapers throughout the country.