Second Homes Point to Industry's Future

Demographics, increasing numbers of new households being formed, nonprime lending, the second home market, higher loan-to-value ratios and price appreciation are six long-term drivers of growth for the mortgage industry, said the chief executive of MGIC Investment Corp., Curt Culver.

Speaking at the Regional Conference of Mortgage Bankers Associations here, Mr. Culver noted that nonprime lending has gone from 5% of the market in 2001 to almost 40% currently. As for second homes, growth in that business is being driven by baby boomers. These sales represent as much as 20% of the market in certain "places in the sun" destination cities, he said.

Mr. Culver said that for the past three years he has been dealing with questions at investor conferences about a possible housing bubble. While there is some leakage now, "it won't burst." Between 1975 and 2005, the average annual price growth in the U.S. has been 6.1%, he said.

There are three ways for the mortgage lending business to capitalize on current market conditions. The first, he said, is to be a leader.

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