Morning Briefing: Housing market outlook is mostly positive despite challenges

by Steve Randall22 Mar 2017
Housing market outlook is mostly positive despite challenges
The outlook for the US housing market is positive despite softening of some indicators.

The rise in house prices is damaging affordability while household formations are slowing, which has led to the Nationwide’s forward-looking barometer of the market declining to its lowest level since 2013.

David Berson, Nationwide senior vice president and chief economist, commented that despite the slide for the index, solid job and income gains are supporting demand for housing.

“The one factor that we continue to keep our eye on is house price appreciation. The current pace is well above the long-term average, eroding affordability for groups such as first-time homebuyers and those whose income gains are not keeping up with the national trend,” Berson said.

Nationwide’s data shows positive and healthy trends in most metros with three of the top metros in North Carolina and three in Maryland. 

Lower margins for independent lenders
Mortgage profits for independent mortgage banks and mortgage subsidiaries of chartered banks fell sharply in the fourth quarter of 2016 as interest rates increased.

The Mortgage Bankers Association reports that the net gain was $575 on each loan compared to $1,773 in the third quarter of 2016. 
"Mortgage lenders reported a combination of both lower revenues and higher expenses,” said MBA Vice President of Industry Analysis Marina Walsh. “On the revenue side, secondary marketing income dropped as mortgage lenders wrestled with less favorable pricing and pipeline challenges.  At the same time, production expenses per loan rose as fixed costs were spread over fewer loans." 

The MBA also found that the pull-through rate for loan closings to applications was 76.45 per cent, the highest recorded by the association’s quarterly performance reports. 

Experian partnership says it will simplify lending
A partnership between Experian and tech firm Finicity have announced a partnership with the aim of speeding up and simplifying the lending process.

The Digital Verifications Solution will enable an end-to-end digital mortgage process which it says will cut the loan approval time to as little as 10 days and provide more accurate and reduced fraud risk for lenders.

By becoming a verified supplier to Fannie Mae’s new Day 1 Certainty initiative, Finicity will enable lenders to validate loan application data including income, assets and employment upfront.

The partners believe that the new platform will particularly benefit those with little or no credit history.


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