The latest economic and policy trends facing mortgage servicers

Join this webinar for an in-depth roundtable discussion on economic and policy trends impacting servicers as well as a look ahead at strategies servicers should employ in the next year.

2021 RealTrends Brokerage Compensation Report

For the study, RealTrends surveyed all the firms on the 2021 RealTrends 500 and Nation’s Best rankings, asking for annual compensation data for the 2020 calendar year.

Steve Murray on the importance of protecting property rights

In this episode, Steve Murray, RealTrends advisor and industry stalwart, discusses some of the issues facing private property rights, including how a case in Germany could potentially affect U.S. legislation.

Lenders, it’s time to consider offering non-QM products

The non-QM market is making a comeback following a pause in 2020. As lenders rush to implement, Angel Oak is helping them adopt these new lending products.

Mortgage

Freddie Mac: Declining mortgage rates boost growth in the refinance market

But fewer Americans are opting for cash-outs

Good news everyone, America’s robust economy is still projected to strengthen the nation’s housing market throughout 2019, according to Freddie Mac’s May Forecast.

“Our outlook for the housing market remains largely unchanged,” Freddie Mac Chief Economist Sam Khater said. “We still expect stronger home sales and housing starts in the coming months due to favorable market conditions and accelerating wage growth.”

In fact, Freddie predicts the 30-year fixed-rate mortgage will average 4.3% for the remainder of the year, which could lead to an increase in both single-family mortgage originations and refinances.

According to Freddie’s analysis, the refinance share will increase from 30% of all originations in 2018 to 33% by the end of the year.

Although, refinance activity has heightened, new data indicates American homeowners are still refraining from leveraging their home equity as supplemental wealth.

“Our quarterly report on refinance activity shows that few U.S. homeowners are choosing to tap into their largest source of wealth despite having a record $16 trillion in home equity available to them,” Khater said. “Most homeowners remain reluctant to increase their mortgage balance, whereas we continue to see balance increases on auto loans, credit cards, and student loans.”

Freddie’s report claims that “cash-out” borrowers represented only 76% of all refinance loans in the first quarter of 2019, falling from 82% at the end of 2018.

Andy Walden, Black Knight’s director of market research, said there is a very clear inverse correlation between rising rates and declining equity withdrawals.

“Over the past three years, the Fed has steadily ratcheted up short-term interest rates, which are directly related to rate offerings on home equity lines of credit,” Walden said. “In fact, the introductory rate on HELOCs has risen by more than two percentage points during that time.”

“Then, 2018 saw 30-year fixed rates rise as well,” he added. “With borrowing costs rising, a significant number of homeowners – despite having record levels of equity – are choosing to forego equity withdrawals.”

And Walden’s findings are spot on, as only an estimated $16.6 billion in net home equity was cashed out during the refinance of conventional prime-credit home mortgages in the first quarter of 2019.

While this number appears large in stature, it’s still a decrease from last year’s $19.1 billion, according to Freddie.

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