Challenging times are ahead. The Mortgage Bankers Association (MBA) lowered its forecast for mortgage originations in 2014 by $57 billion to $1.12 trillion for the year, based on declining mortgage application activity and increasing interest rates.
“Despite an economic outlook of steady growth and a recovering job market, mortgage applications have been decreasing – likely due to a combination of rising rates and regulatory implementation, specifically the new Qualified Mortgage Rule,” said Mike Fratantoni, Chief Economist for MBA. “As a result, we have lowered our expectations for both purchase and refinance originations in the first half of 2014. Purchase originations are now expected to be $677 billion for 2014, compared to $711 billion forecast previously. Compared to 2013, purchase originations are expected to increase by 3.8 percent.”
Refinance originations were revised lower as well and are now expected to be $440 billion in 2014, compared to $463 billion estimated previously. The updated refinance total is around 60 percent lower than 2013 refinance originations.
I know this news was not welcomed. Fewer originations is nothing to cheer about. However, as is my way, I see the good in all of this. First, the need for mortgage lending isn’t going away. People are always going to want to buy houses. The fact is the mortgage industry is needed and is an essential part of the economy. So take comfort in the fact that you are doing needed work.
Second, good lenders shouldn’t worry. If you offer a top-notch process that offers the borrower a good experience you will be ahead of the game. You want to be as close to the borrower as possible. The days of loan officers being glorified order takers are over. Loan officers have to be trusted advisors that cultivate relationships.
So, don’t run for the hills just yet, know that you are doing essential work and get to know every borrower possible.
About The Author
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at email@example.com.