The next year brings a bevy of unprecedented changes to the mortgage market as it shifts from a refinance to purchase business.
Despite all of this, in an environment of rising interest rates and tightening loan criteria, Freddie Mac still believes most of the nation’s housing will remain affordable. The issue that remains, is getting responsible mortgages to the homeowners who deserve them.
Frank Nothaft, chief economist at Freddie, released the enterprise’s 2014 outlook report in conjunction with a HousingWire webinar he participated in.
“The big shift ahead will occur as the single-family mortgage market begins transitioning from a rate-and-term refinance dominated market, to the first purchase-dominated market we’ve seen since 2000,” Nothaft said. “The emerging purchase market should gather momentum in the coming year.”
The webinar, titled Competitive lending in the Qualified Mortgage world, also took a hard look at the challenges lenders will face after the ruling comes into effect in January.
Craig Crabtree, general manager of Equifax Mortgage Services, spoke at length of the critical importance of underwriting and outlined the types of mortgage products that would likely be prohibited under the QM.
This aspect of great underwriting standards will need to be carefully balanced against the need to shorten closing times to under 30 days. Regional banks, for example, should re-approach their underwriting methodology to seek greater efficiency in writing new mortgages.