Mortgage Bankers Association CEO David Stevens warned lenders that they need to prepare for the high amount of refinance activity coming to an end soon.
He told attendees at the Regional Conference of Mortgage Bankers Associations in Atlantic City, N.J., that rates are expected to increase 50 basis points by the end of the year. Furthermore, unless Congress passes the Boxer-Menendez bill, the Home Affordable Refinance Program will also end by the conclusion of 2013. The Boxer-Menendez bill calls for a one-year extension of HARP.
He pointed to MBA projections issued at its annual convention that show the market going down from $1.7 trillion in 2012 to over $1 trillion in 2014 as a result of a decline in refis.
The good news is in the purchase market where household formation is picking up steam and pent-up demand is getting ready to be released.
He pointed to data that claimed the echo boomer generation would have a greater impact on the housing market than their parents in the baby boomer generation has.
Another opportunity is in serving the needs of the African-American, Latino and first-time homebuyer communities. But he pointed to Home Mortgage Disclosure Act data which showed that while whites predominantly are getting conventional mortgage financing, African-Americans and Latinos are more likely to be placed into a government product, which is defined as Federal Housing Administration, Veterans Affairs or Rural Development loans.
The Department of Housing and Urban Development has already gone on the record as saying it is looking at the disparate impact of lender practices.
