Kroll Bond Rating Agency Releases Report: “Declining Mortgage Lending Volumes Ahead”

NEW YORK--()--Kroll Bond Rating Agency (KBRA) has released a research entitled “Declining Mortgage Lending Volumes Ahead.” The report makes the following key points:

  • The Federal Housing Finance Agency's (FHA) decision to raise conforming loan limits for the first time in a decade is being met with enthusiasm from the mortgage industry, but KBRA disagrees with the consensus view that this move will prove to be a significant positive factor for future residential mortgage loan origination volumes. We believe that 2016 year is likely to be the peak in terms of 1-4 family mortgage origination volumes for years to come.
  • With interest rates rising, the economic and financial environment for the US housing market is going to become progressively less hospitable. After nearly a decade-long recovery in both HPA and mortgage lending volumes c/o the Federal Open Market Committee, KBRA believes that the US housing sector is in the process of normalizing – albeit from rate levels that are, in historical terms, still extremely low.
  • Given the regulatory environment and rising trend in interest rates, we believe that lending volumes for both insured depositories and non-bank lenders are likely to fall in 2017 and beyond as relatively lucrative refinancing volumes dry up. This downward trend in mortgage volumes could be a negative factor on earnings in Q4 2016 and beyond for banks and non-banks alike. KBRA notes that no amount of prospective regulatory relief or changes in the rules for loan guarantees in Washington can fully offset the dampening effect of rising interest rates on the home finance sector.

To view the report, please click here.

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Kroll Bond Rating Agency
Analytical Contact:
Christopher Whalen, Senior Managing Director
(646) 731-2366
cwhalen@kbra.com
or
Follow us on Twitter!
@KrollBondRating

Contacts

Kroll Bond Rating Agency
Analytical Contact:
Christopher Whalen, Senior Managing Director
(646) 731-2366
cwhalen@kbra.com
or
Follow us on Twitter!
@KrollBondRating