David Stevens, president of the Mortgage Bankers Association, told the New England Mortgage Banking Conference that MBA economists believe loans used to buy a property rather would be responsible for roughly 60% of total mortgage volume in 2014.
Currently, only about a third of all lending is for new purchase money mortgages. The rest is from people refinancing their current mortgages.
Being able "to ride the refi wave through the winter would be nice," Stevens told a crowd of about 1,000. But it is unrealistic to believe that segment of the market will remain as strong as it has been, even with last week's drop in loan rates.
"There may be another short rally if the Fed stays true," he said. "But eventually, the refi wave is going to come to an end."
Going forward, Stevens said in his keynote remarks, loan officers are going to have to learn how to sell again. "Over the last five years, all you had to do was answer the phone. But that's going to be over, and it's going to be over for quite some time," he said.
The MBA president, a former Federal Housing Administration commissioner, also told the conference that the "No. 1 issue" facing the industry is the lack of credit. "Credit is expanding, but only if you are rich," he said. "If you are a low-income borrower, obtaining financing is more difficult."
He said it is generally believed that it should be harder to obtain a mortgage, and he agreed. But new rules and regulations, he added, should be balanced against their cost. "Who is going to pay for this?" Stevens asked and then answer: "Every penny will be passed on to the consumer."
At the same time, he warned against what he called "railing at the wind" in trying to stop the flow of new rules. "It makes us look foolish," Stevens said. "We now have to focus on thing—the one thing only that counts in the entire process—and that's the consumer."
Meanwhile, another conference speaker called on lenders to act as guidance counselors when making loans.
"A mortgage for most people is a block box," said Michael Calhoun, president of the Center for Responsible Lending. "They rely on you to guide them through."
Calhoun also lamented the fact that the rules covering lending have become too tight in the wake of the mortgage market meltdown. "Rules are needed," he said, "but it doesn't matter if all loans are safe if nobody can get one."
Carol Bulman, CEO of Jack Conway & Co., a realty chain with 30 offices and 700 agents, called the recent wave of lending rules "too much, too fast, too soon."
"There hasn't been enough communication, and ultimately the consumer pays," Bulman told the group. "Behind every single regulation is a person trying to buy his first house, downsize or is having trouble making his mortgage payments. The new rules make sense but they have to be implement carefully."
Lew Sichelman is an independent journalist who has been covering the housing and mortgage markets for more than 40 years.