Mortgage Market Outlook On Mortgage Rates And Regulations
This BLOG On Mortgage Market Outlook On Mortgage Rates And Regulations Was Written By Gustan Cho NMLS 873293
2013 was a great year for the housing and mortgage markets where it is clear and obvious that the housing market has made a major comeback. But will this trend continue? Is the mortgage outlook for 2014 promising or are we going to have another housing bubble blast. There were double digit appreciation of housing values and many home buyers jumped on the home buying bandwagon. As a loan officer, I clearly witnessed where I issued pre-approval letters to home buyers and these buyers lost the property to another buyer who offered above asking prices. In the state of Florida, there were international investors who purchased dozens of homes in the same neighborhood way above asking prices. These were cash deals. Many homes that my client’s purchased were not appraising out at the purchase price due to sellers asking above market prices on their homes. 2013 was a great stellar year for home sellers. What does the mortgage outlook look for 2014? Will the buying frenzy continue? Will the housing market continue to rise? Will mortgage rates remain the same? One thing we know for sure is that mortgage lending will be tougher and harder to qualify for a mortgage loan due to 2014 new mortgage rules and regulations such as the QM Rule, Qualified Mortgage Rule which will be implemented in the United States on January 10, 2014.
2014 Mortgage Market Outlook: Will Housing Prices Continue To Rise?
Housing market outlook seem promising for sellers of homes but doubt it will be as good as 2013. Mortgage rates have spiked up more than one percentage point in a period of several weeks in mid 2013 where the refinance mortgage market came to an abrupt halt and housing sales had an immediate slowdown. The first half of 2013, many parts of the country have seen double digit housing price increases. Realtors and mortgage lenders have not seen such a spurt in business since prior to the Great Recession of 2008. Many realtors and mortgage lenders had record breaking sales in 2013.
- How about 2014?
- How will the mortgage outlook seem for 2014 with the new mortgage rules and regulations?
- Will housing prices still continue to rise?
- Could there be a housing correction?
- Many potential homeowners are on standby and do not know whether to jump in or wait for a correction.
- Look at the stock market.
- Many experts have been preaching a stock market correction when the market was 25% lower than what it is today.
- It seems that the stock market continues to go up.
- There will be a correction and when there is, the stock market will probably tank like how the housing market did back in 2008.
- This is solely my opinion.
- From my work and life experience, I am a strong believer where if something keeps on going up with no fundamental reason, its bound to come down equally as fast.
- Unfortunately, many hard working Americans will probably get hurt by such a market crash, whether it is a real estate market crash or a securities market crash.
Mortgage Market Outlook On Lending
Although unemployment numbers seem to be improving, there are still millions of Americans who are not on the unemployment numbers because they have just given up looking for work or are unemployed. Many of those who lost their businesses are just merely getting by working odd jobs and just making ends meet. Others who had great paying jobs are now working part time jobs or multiple part time jobs. There are still millions of folks who have not recovered by the Great Depression of 2008 and things do not seem positive. Almost half of American homeowners have no equity or negative equity in their homes and are pretty much stuck there unless they intend on foreclosing or short selling their homes. Those folks who are thinking of purchasing a new home in 2014 will be facing tougher lending criteria and higher mortgage rates than 2013.
Mortgage Market Outlook Under The Dodd Frank Mortgage Reform
New mortgage guidelines and rules will take effect under the Dodd Frank Mortgage Reform Act. Mortgage lenders will be required to tighten and abide by the new lending guidelines for Qualified Mortgages, which is also known as QM in order for them to be limited from lawsuits by mortgage loan borrowers. Under the new Qualified Mortgage guidelines, a mortgage loan cannot exceed a back end debt to income ratio of 43% on conventional loans even though the mortgage loan borrower puts a down payment of more than 20% down on a home purchase. All fees and costs in originating a mortgage loan cannot exceed 3%. I am anticipating more mortgage lender overlays and lenders will be scrutinizing every loan more carefully than ever.