3 Housing Trends to Watch for in 2020
Despite forecasts that mortgage lenders would struggle in 2019, an unexpected turn in interest rates, which were expected to rise throughout the year, created a low rate environment in which lender profits were up, pipelines were full and refinances surged.
Now, as 2020 dawns, what can we expect to see for the future of housing?
For starters, I fully expect the trends that began in 2019 will continue into the new year and even grow stronger as education and competition increase and the need for technology and adaptation grows.
1. Mergers and acquisitions will grow
As I previously mentioned, 2019 was a great year for housing despite forecasts and worries that high-interest rates would keep lenders from earning a profit.
While they may have struggled a bit in the first half of the year, a recent report from the Mortgage Bankers Association showed that in the third quarter of 2019 lenders made the highest profit per loan they’ve seen since 2016.
Independent mortgage banks and mortgage subsidiaries of chartered banks reported a profit of $1,675 on each loan they originated in the second quarter.
This is up significantly from a profit of just $285 per loan in the first quarter and marks the highest profit since the third quarter of 2016 when profits hit $1,773 per loan.
But despite this increase in profits, lenders will still struggle amid increased competition in 2020, leading to an increase in mergers and acquisition activity.
The period we’re in right now is truly historic for rates. At the end of its September meeting, the Federal Reserve cut interest rates for the second time in 2019, bringing the benchmark rate to a range of 1.75% to 2%. And the Fed is still expected to cut rates once more in 2019 at the December meeting.
Posted on housingwire.com on 12/02/2019.