It Hasn’t Been This Hard To Get a Mortgage in More Than Five Years

iLeads Mortgage Market Minute
Welcome back to iLeads Mortgage Market Minute, where we bring you the latest, most relevant news regarding the mortgage market. We hope you enjoyed last week’s edition where we talked about Zillow Predicts Small Home Price Drop Through Rest of 2020. This week we’re bringing you:


It hasn’t been this hard to get a mortgage in more than five years*

Mortgage credit availability falls to lowest level since 2014

As COVID-19 froze the country’s economy for most of March and all of April, it became increasingly more difficult for borrowers to get a mortgage, even if they had the means to take one on.

In fact, a new report shows that in April, the availability of mortgage credit fell to its lowest level since December 2014. That means it hasn’t been this hard to get a mortgage for more than five years.

The data comes courtesy of the Mortgage Bankers Association, which reported Thursday that its Mortgage Credit Availability Index fell to 133.5 in April. A decline in the MCAI indicates that lending standards are tightening, meaning it is getting more difficult to get a mortgage. Read more in-depth here.


Millennial refinance activity hits record high in March*

With interest rates slashed and U.S. homeowners looking to save on their mortgages as the coronavirus crisis took hold, mortgage refinancing activity among millennials hit a record high this past March, according to the latest Ellie Mae Millennial Tracker report.

The refinance share for all millennial borrowers during the month was 38%, up four percentage points from February 2020. It was the third straight month that the refi share for millennials increased, reaching its highest level since Ellie Mae started to track the metric in 2016.

According to Joe Tyrrell, Ellie Mae’s chief operating officer, many savvy millennial homeowners clearly took advantage when the Federal Reserve trimmed its target interest rate to near zero. The average interest rate for all 30-year mortgages closed by millennials fell from 3.86% this past February to 3.66% in March — the lowest average rate since May 2016. Read more in-depth here.


A new lending environment will bring new mortgage fraud risks*

What should risk managers be thinking about?

The coronavirus pandemic has touched nearly every aspect of day-to-day life. What was unimaginable a few months ago is now common. Entire companies working from home? It’s normal. Millions of new unemployment claims? That’s a weekly headline.

When you combine the dramatic way the world has changed in the past few months with new government programs and verification practices, an increase in fraud in the $1.9 trillion mortgage industry is certain. What should risk managers be thinking about?

Near-Term Risks
High Refinance Volumes: Most lenders are working on high volumes of refinance loans. Heavy workloads and operations disruptions mean staff is more apt to miss red flags. To improve detection, focus on the highest-risk issues. Income and occupancy fraud are the most common for refis. Value inflation could emerge for cash-out refis due to changes in appraisal policy. Read more in-depth here.


Talking three P’s of 2020 with this year’s Top Originators*

It’s an interesting time to be a mortgage originator.

The year started off with a bang, with solid housing sales numbers coupled with improving construction figures. Many thought that 2020 could be a banner year in the mortgage industry — but that was before the coronavirus pandemic became the biggest story of the young year on a global scale, wreaking havoc on people’s daily lives as well as on the economy.

Still, as the year goes on, every day brings us one step closer to the light at the end of the tunnel, and potentially, to a dormant market just waiting to reawaken. And with the big reveal of Scotsman Guide’s newest Top Originators rankings, we thought it would be the perfect time to pick the brains of some of the industry’s pinnacle producers and thought leaders for insights, observations, and best practices for 2020. We spoke to many of our highest ranking originators, consistent contenders and rising stars alike, to hear from the about their three P’s of 2020: perspectives on what’s going on in their markets, predictions on what’s to come, and pointers on not only surviving these turbulent times, but also differentiating your business, leveraging new opportunities and finding ways to maximize the lending landscape. Read more in-depth here.


Pre-Lockdown Home Prices Increase by Double-Digits in Some Metros*

Home prices really ramped up in the first quarter of 2020 as inventory failed to make significant gains. The National Association of Realtors® (NAR) said the median single-family home in the quarter sold at $274,600, a 7.7 percent annual increase. Prices rose in 96 percent of the 181 metropolitan areas tracked NAR. In the fourth quarter of 2019, 94 percent posted gains.

Forty-six metros, mostly in the West and South regions, saw prices increase by double-digits. This included Boise City (18.1 percent), Eugene (14.5 percent), and Colorado Springs (14.4 percent), among others.

“The first quarter price jumps mostly reflect conditions prior to the coronavirus outbreak and show the strength of the housing demand prior to the pandemic,” said Lawrence Yun, NAR chief economist. “Even now, due to very limited listings, home prices are showing no signs of buckling.” Read more in-depth here.


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