Inflation, which is triggering higher interest rates, as well as the re-emergence of alternative mortgage products are the most pressing challenges for mortgage lenders in 2018, according to a Genworth Mortgage Insurance Industry Survey released on Wednesday.
The survey, which asked industry professionals about their opinion on the biggest challenges that the industry and market were facing in 2018 revealed that 79 percent of the respondents cited these as the most notable challenges for the rest of the year. An additional 17 percent cited loosening of credit standards and 4 percent said excess liquidity in the mortgage market had them worried.
“Rising interest rates and inflation, when combined with today's inventory shortage, are accelerating home price appreciation, causing some lenders and consumers to explore less-tested methods for financing home purchases,” said Rohit Gupta, President, and CEO, Genworth Mortgage Insurance.
Genworth also asked respondents about what they thought were the best ways to improve access to credit in the mortgage market. Removing legal uncertainty for lenders originating FHA loans topped the list of improvements with 44 percent lenders saying that it would ease credit access. Lower compliance costs for lenders (33 percent) and adoption of alternative credit scores (14 percent) were some of the other methods to improve access to credit in the mortgage market, the survey found. Around 12 percent lenders also said that more ambitious affordable housing goals for the GSEs would also help.
Speaking of GSEs, 68 percent of respondents said that they had begun to integrate or had already fully integrated GSE Day One Certainty tools into their processes. However, 32 percent said that they had still not begun using third-party data validations on DU/LP loans, the survey said.
The Genworth survey also looked at industry sentiment on the role of compensating factors in underwriting, navigation advancements in loan processing platforms, and GSE Day One Certainty tools. It revealed that 92 percent of industry professionals agreed that given the recent rise in Debt-to-Income (DTI) limits, compensating factors should play a role for an above 45-DTI applicant.
Technology was also a concern for many lenders with 54 percent lenders saying they easily identified with customizable dashboards for organization-wide production management as a top service that they would like to integrate into their loan origination system (LOS) platforms.