Several trends in the first quarter of 2022 have significantly impacted lenders and their businesses, ranging from housing market trends to mortgage rate trends. Quite a lot has changed in the spring, which will affect some of the previously forecasted scenarios for the industry. Here are some of the key forecasts lenders and mortgage originators need to be aware of as we move into the other half of the year.
- Currently, predictions are on the 50-basis point increment in May and June, followed by the 25-basis point hike to year-end. Due to the aggressive timeline that balance sheet runoff is expected to take, markets responded swiftly, driving mortgage rates higher than expected. As it stands, rates are at the highest since 2010.
- Despite being widely anticipated, the inventory of for-sale properties does not appear promising for the rest of 2022, especially considering the rise in mortgage rates and existing homeowners’ feelings of being locked in.
- Home price rise, which picked up momentum at the beginning of 2022, is expected to remain strong and continue to grow at a double-digit rate for the rest of the year, thanks to rising demand and historically low supplies.
- Refinance origination volume is predicted to drop significantly towards the end of this year, probably by more than 70% compared to 2021, due to much higher mortgage rates than originally expected.
- Robust employment and income growth have contributed to a low rate of new delinquencies. The 30-day delinquency rate is still at an all-time low; however, foreclosure rates increased marginally in January when foreclosure moratoria and the CARES Act forbearance program expired.
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