2014 Recap In Mortgage Lending
2014 has come and gone and it was a very tough year in mortgage lending. 2014 sustained a substantial reduction in mortgage loan production nationwide and many companies has laid off tens of thousands of workers. The overall number of mortgage loan production in 2014 was $1.1 trillion according to data released by the MBA, Mortgage Bankers Association. These figures are 40% below the figures of 2013 where total mortgage loan volume for 2013 was recorded at $1.8 trillion. Home purchase mortgage loans were substantially down from the 2013 levels. Due to higher mortgage rates, the majority of reduction in mortgage loan volume was from refinance mortgage loans. Refinance mortgage loans went down a whopping 60% in 2014 compared to 2013 refinance mortgage number.
2015 Outlook In Mortgage Lending
Will 2015 continue on a downward spiral like 2014? Nobody has a crystal ball but most mortgage experts and analysts have mixed predictions.
Experts predict higher mortgage rates in 2015. However, January and February proved great for mortgage rates where mortgage rates hit an 18 month low in January. Average mortgage rates towards the latter of 2014 were at 4.5%. 30 year fixed mortgage rates have dropped below 4.0% and are now hovering around the 4.0% mark. Economic numbers such as jobless numbers, job growth, and earnings reports are expected to be stronger in the coming months which will most likely trigger a mortgage increase from the Federal Reserve Board later this year. The stronger the economic number are, the worse it is for mortgage rates. The weaker the economy is, the better it is for mortgage rates. If the stock market plummets, it is good for mortgage rates. Many mortgage lending experts are predicting mortgage rates to sky rocket to 4.5% to 5.0% by year’s end.
New GFE, Truth In Lending, And HUD-1
Effective October 3 of 2015, there will no longer be a Good Faith Estimate, Truth in Lending, and HUD-1 settlement statement. All the old GFE, TIL, and HUD-1 will become extinct and these forms will be replaced with a easier to understand, simplier Loan Estimate and Closing Disclosure Forms. The Loan Estimate form will be replacing the current GFE and TIL while the Closing Disclosure form will be replacing the current HUD-1 settlement statement and the final Truth in Lending Disclosure.
CFPB: Consumer Finance Protection Bureau
The Consumer Finance Protection Bureau, also referred to as the CFPB, is the governmental agency that has initiated the implementation of these new mortgage loan disclosures with the objective for the consumer to better understand the terms and conditions of the mortgage loan. The new closing settlement statement is now supposed to be disclosed in 3 business days in advance of closing where the current HUD-1 settlement statement only needs to be disclosed one day prior to closing. This new rule will most likely cause delays in mortgage loan closings.
Lower FHA Annual Mortgage Insurance Premium
With HUD lowering the FHA annual mortgage insurance premium from 1.35% to 0.85% on January 26, 2015, many homeowners will likely refinance their current mortgage loan to take advantage of the huge savings form the 0.50% FHA annual mortgage insurance premium reduction.
2015 Mortgage Lending Outlook: Conventional Loans
Conventional loan borrowers, first time home buyers, can now qualify for a conventional loan with 3% down payment. Fannie Mae and Freddie Mac has reinstituted the 3% down payment conventional loan program for conforming mortgage loans to promote home purchases and home ownership. The 3% down payment conventional mortgage loan program are for first time home buyers or home buyers who did not have any home ownership in the past 3 years. Maximum conforming loan limits is $417,000 unless the property is located in a high cost area.
Related> 2015 mortgage lending guidelines