Get A Quote
Refinancing Numbers Expected to Be Higher than Previously Predicted for 2017
Mortgage experts are forecasting that refinancing numbers will be higher than previously expected for the rest of 2017. The Mortgage Bankers Association, for example, changed its prediction of $0.496 trillion in refinance dollars to $0.511 trillion, approximately 32% of all originations. That’s a good market share, but much lower than last year.
The trend won’t end with 2017 either, with the forecast for both 2018 at $0.410 trillion and 2019, $0.395 trillion. Each year, refinancing loans are expected to make up a smaller portion of the total originations, down to 26% in 2018 and 24% in 2019.
Fannie Mae, the largest source for U.S. mortgages, also upped its prediction for both refinancing dollar amounts and market share for the second and third quarters of this year—while the fourth quarter forecast remained steady. For the entire year, Fannie Mae predicts refi loans will account for 34% of total originations, much lower than last year’s 48%.
Expected Interest Rate Hikes Are a Factor
Expected interest rates hikes in the near future are one factor contributing to the high refinance numbers. Homeowners are refinancing to lock in low rates, and experts predict refinancing will remain popular until the Fed raises interest rates—now close to historic lows.
Change in Debt-to-Income Ratio Also Expected to Have an Effect
The change in Fannie Mae’s debt-to-income (DTI) ratio policy is one reason the entity is expecting more refinance loans in the third quarter. Beginning July 29, the debt-to-income ratio used by lenders backed by Fannie Mae is increasing from 45% to 50%.
Because of this change, not only are more borrowers expected to qualify for refinance loans and new mortgages, but they will be able to borrow more money. For example, a 5% change in the ratio allowance can increase the amount of a mortgage or refi loan by as much as $30k.
The change is aimed at making home ownership easier, especially for Millennials who have large amounts of student loan debt. However, some experts question how much impact the new DTI will make. That’s because some lenders are already issuing loans to borrowers with a DTI ratio higher than what is recommended—which they can legally do as long as they can reasonably show that the borrower will not default.
Velocity Title Company Moves Your Forward
Velocity Title Company is a full-service title company offering a comprehensive line of title products and services for realtors, lenders, attorneys, homebuyers and builders. With unmatched experts and the latest technology in the industry, Velocity Title will make your job easier and your clients happy. If you’re a lender interested in learning more about our services, visit out Lenders page today.