Rates expected to upsurge to 4.6% in 2018 and over 5% in 2019 and 2020.
2017 has been quite a ride for Mortgage Interest rates in the US. While some months, saw a decrease in rates, others saw an increase owing to the rate hikes by the FED. The US economy saw the third interest hike of 2017 with the Federal Reserve raising interest rates by a quarter of a percentage point on Wednesday (Dec 13) and is projecting three more hikes in 2018 and two more in 2019. Also, according to a recent Housingwire article, top economists at the Mortgage Bankers Association (MBA) predict purchase mortgage volume will grow, while refinances will decrease as interest rates continue to rise. Mortgage interest rates are expected to upsurge to 4.6% in 2018 and exceed 5% by 2020. This does raise a question about borrowers’ ability to handle growing rates as well rising home prices. MBA economists commented that this gap is short lived. With respect to house prices, a stabilization is expected but not a decrease. They also foresee a trend where a growing number of companies will plan to raise wages to attract qualified candidates moving forward. Borrowers will therefore be able to handle those higher rates thanks to higher wages.
However, the scenario for lenders doesn’t seem easy. With the expected rise in Mortgage rates, the overall origination volumes will see a decline. As a result, managing origination costs in times of declining volumes will lead to margin pressure. Also, a low inventory of new homes is sure to drive stiff lender competition. In order to sustain, lenders will have to deliver enhanced borrower experience without an increase in their fixed cost. Faster turn times, lowering costs while at the same time improving quality control will become key.
SLK Global Solutions, a business process transformation company specializes in end to end mortgage solutions driven by disruptive technology offers MmaaS – Mortgage Management as a Service, a modular end to end mortgage assembly line solution that can enhance customer experience, lower cost to fund, and accelerate loan processing while at the same time improve quality control with zero tolerance compliance. Established in 2001, SLK Global has been supporting the top originators and servicers in the country including 4 of the top 25 US Banks. Backed by strong domain and process expertise, their monthly transactions sum up to processing, pre and post underwriting approaching $1 Billion. In addition, the company is also certified with ISO 27001: 2013, ISO 9001:2015, SSAE 16 (SOC 1 & SOC 2), PCI DSS V3.2, ISO 22301:2015 (BCP), HIPAA & Reg AB.
SLK Global’s expertise in delivering customizable services and technology driven products expand to other industries as well, such as Banking, Cards and Payments, Lender Placed Insurance and Title Insurance. To know more, write us at firstname.lastname@example.org and schedule a discussion today! You can also visit our website at https://www.slkglobalsolution.com