With Bank of America and Citi both announcing layoffs in October, you might think the mortgage industry is moving into another slump. Think again. There are several signs that 2015 could be a good year for mortgage lenders, and for the economy in general. Here is our 2015 mortgage industry outlook and trend alert.
Loan Officer Job Growth at 8% Through 2022
According to the U.S. Bureau of Labor Statistics, the number of mortgage loan officer jobs is expected to grow by 8% through 2022. That’s roughly another 23,000 loan officer jobs between now and then, if their forecast proves accurate. This is a normal rate of growth, according to the Bureau’s historical trends. And given everything the mortgage industry has been through in the last seven years, “normal” is good.
Originations Predicted to Rise 7% in 2015
The Mortgage Bankers Association (MBA) recently predicted that the total number of loan originations could rise by 7% in 2015, compared to the current year’s total. According to Michael Fratantoni, MBA’s chief economist: “We are projecting that home purchase originations will increase in 2015 as the U.S. economy continues on its current path of stronger growth, job gains and declining unemployment.” Most of this projected growth is on the purchase side. Refis, on the other hand, are expected to drop slightly in 2015 as rates inch upward.
QRM Rule Finalized (Finally); Aligned With QM
In October, the FDIC announced that it and five other agencies have finalized the definition of a Qualified Residential Mortgage (QRM). As you probably already know, this definition determines which home loans are exempt from the risk-retention rules built into the Dodd-Frank Act. According to the FDIC announcement, “the final rule aligns the QRM definition with that of a qualified mortgage (QM) as defined by the Consumer Financial Protection Bureau.” The QM rule requires full documentation of loans and generally limits borrowers to a total debt-to-income ratio of 43%, among other things.
Fed Ends QE3; No Stimulus Planned for 2015
Also in October (an interesting month for the mortgage industry) the Federal Reserve announced it would end its long-running quantitative easing program. The third round of bond-buying, known as QE3, has been running since September 2012. In the minutes from their October meeting, the Fed’s Open Market Committee said they will keep the federal funds rate “in the 0 to 1/4 percent target range … for a considerable time following the end of its asset purchase program.”
Mortgage Rates Expected to Rise Gradually in 2015
Thirty-year mortgage rates have hovered around 4% all year, and dipped below that mark at the end of October. So what about next year? What’s the 2015 mortgage industry outlook where rates are concerned? According to Freddie Mac’s long-range outlook, rates could rise gradually over the coming months as the economy continues to improve. They have predicted incremental upticks, with the 30-year average possibly reaching 5% by the end of 2015. According to a Freddie Mac press release, “we expect to see rates rise as the economy strengthens. At the end of 2015, we expect to see the 30-year fixed mortgage around five percent.”
Mortgage Companies Can Benefit from Blogging in 2015
When Twitter and Facebook came onto the scene, some “experts” predicted it would be the end of blogs and regular websites. Obviously that hasn’t happened. When consumers are researching financial products, they don’t look to Facebook or Twitter. Those are social sites. They look to informational blogs and websites. According to Google stats, U.S. consumers conducts hundreds of thousands of mortgage-related internet searches every day. You can capitalize on this in 2015 by launching an aggressive blogging program. And we can help. We specialize in mortgage blogging. We can help you connect with all of those loan shoppers who are conducting online research.
Did we miss something? Is there another data point, projection or forecast that should be added to our 2015 mortgage industry outlook? Let us know. Just drop a comment in the box provided below, with a link to the source. We will update the industry outlook page as needed to make it more useful. So don’t hesitate to chime in!