According to Fannie Mae, most lenders expect to expand their businesses for the remainder of the year, and few are reporting plans to downsize. Out of these lenders, a majority will be increasing offices and lenders, or maximizing marketing efforts to achieve their targeted growth goals. While most businesses are planning for success, they identify problems with compliance as their biggest concern, followed by concerns over volume decrease risk.
Continue reading to learn about trends in 2016’s housing market and how most businesses are mapping out their strategies for success.
2015 was a very strong year for the housing market. Home sales and housing starts were measured at their highest growth rates since the housing crash in 2008. Home appreciation was also strong, which influenced the increased number of mortgage originations purchased last year. Lenders were also able to benefit through refinancing since mortgage rates were lower than normal.
Lenders will have a harder time this year because mortgage rates are likely to rise as a result of the Federal Reserve normalizing monetary policy. It’s predicted that this year will be a good one in terms of home sales, home prices, and new construction. As interest rates increase, there will be fewer refinances and single family mortgage originations, so competition among lenders will be more heated.
Lenders will need to work harder and smarter this year to be successful.
Over 88% of lenders plan to expand their originations this year. Getting more business will either be accomplished by opening up more branches and increasing staff, or by expanding marketing efforts. Compared to the past, more lenders are emphasizing gaining new borrower segments and growing their online lending capabilities, which allow consumers to place orders online. Fewer lenders are formulating new mortgage products in order to attract more business.
Regarding mortgaging service business, a majority of lenders are attempting to grow in this area as well, with only 2% reportedly planning to downsize. The primary reason for expanding into mortgage servicing is to increase revenue and profit. Secondarily, lenders hope for cross-selling opportunities for their other products or to hedge against the predicted decrease in originations.
The top risk concerns this year, from highest to lowest, include CFPB compliance, volume decrease, credit, operational, repurchase, interest, and fraud risk. Compared to last year, CFPB compliance risk is still the top concern, while the concern over a decrease in volume has cooled off significantly. Operational risk is higher, whereas the other form of risk is comparable.
Lenders should choose three of these areas and focus on how to proactively prevent issues in these areas.
To help you thrive in 2016, Acuity National Real Estate Solutions offers nationwide coverage, a 24-hour portal to access, upload, and download files, and other cutting-edge online tools. We use technology to streamline closings and increase compliance. For more information, please visit our homepage.