December 22nd, 2016 4:36 AM by Jackie A. Graves
With the Federal Reserve raising interest rates
last week and more rate hikes to come, next year should be a whirlwind for the
chestnuts roasting on an open fire, Federal
Janet Yellen is nipping at the noses of mortgage industry professionals with
one interest rate hike in the bank this year and two or three more likely on
the way in 2017.
Merge that scenario with a new president in Washington, D.C., and
a healthier U.S. economy, and 2017 really does shape up to be a barn-burner for
mortgage industry professionals and home financing consumers.
What can both parties expect to see happen next year in the
mortgage sector? Here are five likely scenarios, delivered by veteran mortgage
higher lending rates - Bill
Dallas, co-founder and CEO at Cloudvirga, a Los Angeles-based mortgage
workflow technology firm, says improvement in wage growth along with a strong
job market will give support to consumer spending, which should help boost U.S.
gross domestic product. "We expect GDP to increase to 2.1% in 2017 and
2.0% in 2018, which in turn would cast an upward pressure on mortgage
rates," he notes. Dallas says he expects 30-year fixed mortgage rates to
rise to 4.2% for the full year 2017 and 4.6% in 2018. "Under that
scenario, more households will be discouraged to refinance," Dallas adds.
and Freddie privatized - Michael
Taylor, branch manager at First Home Mortgage Corporation, in Millersville,
Md., says 2017 will see Fannie Mae and Freddie Mac begin the process of
privatization. "The agencies have paid back their TARP loans and have been
paying the U.S. Treasury," he says. "Now it's time to spin them back
into the private sector."
mortgage loans - Neil
Garfinkel, managing partner at Abrams Garfinkel Margolis Bergson, LLP in New
York City, says higher interest rates are already having a negative impact on
loan originations and refinancing. "A report from the Kroll Bond Rating
Agency predicted a 20% drop in loan origination volume in 2017 and a decrease
in refinancing volumes from $263 billion this quarter to $145 billion in the
first quarter in 2017," he says. "We are starting to see a slowdown
in loan originations already."
home prices - Garfinkel
says he also anticipates a decline in home sale prices in the New York
residential real estate market in 2017. "I believe that higher mortgage
rates will result in lower housing prices," he says. "Lenders who
have strong lending programs will do well in the marketplace."
rates higher, expect an early home buying season - Theresa Williams-Barrett, vice president of
consumer lending and loan administration at Affinity Federal Credit Union, says
loftier interest rates and the urge to buy before lending costs really rise
will have buyers on foot in January and February, well before the tradition
spring home buying busy season. "Many people were waiting on the sidelines
in anticipation of rising rates - though still, they remained low,"
Williams-Barrett says. "Now we're seeing the rise in rates come to
fruition and as a result, we should anticipate those who were once on the
sidelines, begin to act on the market in hopes of capitalizing before rates get
higher. Keeping that in mind, buying season has traditionally always been
around spring, but we may see that season take place as early as winter
With so many big impactors in play, 2017 should be an
eye-opening one for the U.S. mortgage sector, especially during the first three
months of the year. Expect change and volatility, because that's what experts
say will transpire with mortgages in 2017.
O'Connell - To view the original article click here