Lee Stroh January 21, 2020

Newsletter - January 2020

Mortgage rates dropped a whole percentage point between the beginning and end of 2019, boosting originations in the second half of the year, but the industry was also dogged by a low supply of homes and rising construction costs.

Will mortgage rates rise in 2020? Will the inventory crisis continue? What should we expect from the market in the new year?

Here are four predictions from mortgage-industry experts:

  1. Mortgage rates will hold steady in 2020 and beyond. According to Freddie Mac’s forecast, mortgage rates are expected to stay around 3.8% throughout 2020 and 2021, sustaining the momentum created last year. The Government-Sponsored Enterprise is anticipating $1.255 trillion in purchase originations in 2019, and for that figure to rise for the next two years. It also expects home sales to rise, from an anticipated 6 million in 2019 to 6.1 million in 2020 and 6.2 million in 2021.
  2. Homeowners will keep refinancing. Last year’s drop in interest rates prompted homeowners to refinance to improve the rate or term of their mortgages. Freddie Mac expects there to be $846 billion in refinance originations in 2019, and forecasts that number will dip slightly this year to $834 billion. But that number is still more than $300 billion higher than it was in 2018.
  3. Inventory will remain low. Builder confidence is at its highest since 1999, with housing starts continuing to increase through November 2019 (the most recent data available). But according to Realtor.com Senior Economist George Ratiu, we’re well below the 1.1 million to 1.2 million new homes needed to keep up with demand. Realtor.com projects the low supply of homes for sale could worsen in 2020 due to moderating home prices, as homeowners hold off on selling. But with low mortgage rates offsetting the inventory crisis, some economists expect modest growth in both home sales and prices.

Mortgage servicers will need to invest in tech. Mortgage servicers need to invest in innovation and new technology in 2020 to better serve younger buyers. Millennial and Gen-Z consumers have become accustomed to self-service and 24/7 availability from the companies they do business with, and as lenders move in that direction, servicers will have to follow along. This takes resources, of course, but these technologies will also help servicers to identify and mitigate risks as well as cut costs.

Whatever 2020 has in store, Blue Streak Docs can manage your document retrieval and property reports to help you protect your portfolio. If you haven’t worked with us yet, try us out this year and get your 5th order FREE!

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