DS News spoke with John Ardy, CEO of Resitrader, to discuss just that. Ardy divulged insight into what mortgage trends he is currently seeing, the opportunities and challenges that come with these trends, and what industry shifts are anticipated for 2017.
What mortgage trends are you currently seeing in the industry?
Well, I think the election surprise resulted in some big changes in overall pricing. For rates, there was about a 50 basis point movement and I think it's about 232 right now for the 10 Year Treasury, which is a bellwether for mortgage rates. I think people are still reacting and digesting that.
What are some challenges that come with the change in loan pricing?
Generally speaking, if interest rates increase, then a loan balance before and after the change in rates will result in a higher payment. It has the effect of making housing a little more expensive in the context of a monthly payment. It also suggests that fewer people will refinance their loans, because the interest rate they previously set is better than interest rate that they can get today.
Are there opportunities for lenders and servicers that come with these changes?
There's a couple of opportunities. Higher rates could result in additional product diversification. It's too early to see any of that just yet, but it may be the case that if rates continue to increase, there will be more non-agency products over time because lenders feel like there's a little more room with respect to risk-based pricing.
What shifts in the housing industry are anticipated to come in 2017?
The new administration is definitely something everybody's watching. They stated that they plan to make revisions to the Dodd-Frank act, which has had a cost impact on the mortgage industry in terms of the need for compliance. If those requirements are changed in the direction of reduced requirements—and that appears to be the intent of this administration—then that does give originators the opportunity to reduce the cost of lending. There's a cost to regulation.