17 PUB. 12 2022 ISSUE 2 An expected rise in rates due to Federal Reserve tapering may slow price appreciation, though additional housing is needed to calm price increases and stabilize affordability. Demographics Based on U.S. census data, millennials represent the largest demographic in the United States. The millennial cohort is entering their peak homebuying years and will likely fuel the purchase market moving forward. Servicing The Federal Reserve’s taper of bond purchases is generally expected to put upward pressure on mortgage rates. Mortgage lenders, who were able to retain servicing at historically low rates, are well-positioned to benefit as valuation increases, and extended cash flow provide a natural hedge to reduced production income. Technology Of the nonbank mortgage companies completing initial public offerings (IPOs), many referenced their investment in technology as a core strength. Fintech companies emerged on the scene with innovative ideas aimed at improving the customer experience while driving down delivery costs. Into 2022 and beyond, expect to see continued investment in technology that leverages data and automation to innovate and connect with consumers. Private Label Securitization Agency mortgage-backed securities (MBS) continue to dominate securitization volume; however, recent data from the Urban Institute indicates a rise in non-agency MBS. A jumbo mortgage exceeds the governmentsponsored enterprise (GSE) conforming loan limits; a larger share of mortgages qualifies as jumbo as prices rise. The private-label securities (PLS) market presents an opportunity for nonbank lenders as banks look to grow loan portfolios amid a rise in deposits. Regulatory Roundup Suspension of the Federal Housing Finance Agency’s adverse market fee adjustment may prove a welcome sign of recovery. The Biden administration, however, paused talks about ending GSE conservatorship. Under new leadership, the Consumer Financial Protection Bureau (CFPB) is prioritizing fair lending and racial equality. The CFPB’s pricedbased qualified mortgage (QM) loan definition became mandatory as of July 1, 2021. The impact on GSE involvement in the QMmarket remains unclear, though it could provide an opportunity for PLS market expansion. Finally, the Coronavirus Aid, Relief, and Economic Security (CARES) Act and pandemic-related regulations remain in place; however, its impact wanes as mortgage-related forbearances and delinquencies decrease. Continued on page 18
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