Housing teeters on the edge of unaffordable
More jobs, higher wages and surging consumer confidence are combining to spur increasing demand for homes, but the flip side is that buyers are having a harder time
finding homes in an affordable price range. Housing analysts universally agree that the
market’s affordability level eroded last year, although they disagree on the extent of the
problem. CoreLogic has deemed 105 U.S. metros “overvalued.” Analysts also have pointed out that rising wages and low mortgage rates, which have run about 2 percentage
points below the historic average, have kept homes relatively affordable.
MBA rolls out GSE reform roadmap
The nation’s largest mortgage trade group rolled out a blueprint on how Congress
and the Trump administration could end the government’s near decade-long conservatorship of Fannie Mae and Freddie Mac. The Mortgage Bankers Association (MBA)
presented a vision of a new system that turns the government-sponsored enterprises
(GSEs) into regulated, private utilities, and also would allow for new chartered entities
to enter the market as mortgage guarantors. Notably, MBA’s plan would take a long
time to implement, up to 10 years to transition into the new system.
Nonbank loan profits jumped in 2016
Despite rising production costs and increased regulation, nonbank lenders made
more money in 2016 on the average mortgage than in 2015. The per-loan profit in 2016
averaged $1,346, up 13.2 percent from $1,189 of profit per loan in 2015, MBA reported.
Generally speaking, 2016 was a good year for the mortgage industry. Low interest rates
kept refinancing in play through most of last year, and the home-purchase market
continued to pick up.
Cash-out refinances hit eight-year high
U.S. homeowners cashed out more equity in their homes in the final quarter of last
year than in any quarter since the last downturn, according to Black Knight Financial
Services. Borrowers pulled out $31 billion in equity through 488,000 cash-out
refinances, the company said. The cash-out volume was up 50 percent compared to
the fourth quarter of 2015, and at the highest level since the second quarter of 2008.
The boom in cash-outs came as available home equity rose by $570 billion through
2016, to $4.7 trillion, the highest mark since 2006.
GSEs ramp up risk sharing in 2016
The GSEs Fannie Mae and Freddie Mac ramped up efforts in 2016 to offload the
default risk on their riskiest single-family mortgages. The enterprises met the goal
of transferring risk on 90 percent of the target loans in 2016, GSE regulator the
Federal Housing Finance Agency reported. Fannie and Freddie transferred a portion
of the risk on $548 billion in single-family loans in 2016, which is up from $420 billion
in 2015, $378 billion in 2014 and just $90 billion in 2013. n
By Victor Whitman
The average property-tax bill for a U.S.
homeowner in 2016
Source: Attom Data Solutions
The year-over-year growth in home equity
in 2016 for homeowners 62 and older
Source: National Reverse Mortgage Lenders Association
Annual rate of home sales this past March,
the strongest pace since February 2007
Source: National Association of Realtors