6 Key Trends Impacting the Mortgage Industry in 2018

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key mortgage industry trend in 2018The housing industry is one that is constantly changing in response to outside influences and there are several changes brewing that can impact the business prospects of mortgage professionals. There are a few trends which are likely to have a greater impact in 2018 than others.

Here are six of the key areas, which will impact inventory, pricing, mortgage rates, and state licensing.

1. Increasing Housing Supply

In 2017, there was a great demand for homes for first-time home buyers, but the inventory wasn’t there. Builders focused on more expensive projects and those who owned properties appealing to these buyers were not interested in selling. There are signs that the inventory will be increasing in 2018, thus easing the strain on inventory in many markets.

2. Slowing Price Increases

As supply rises, the price increases will start to level off. In 2018, these increases are likely to hover around 4%, as opposed to the average of 6% of 2016 and 2017. As a result, buyers with limited finances are more likely to be able to purchase a home. With increased supply options and steady pricing, mortgage professionals can look forward to more clients as demand for their services rise.

3. Mortgage Rates Are Heading Up

This trend must be taken with a grain of salt. In 2017, increases in mortgage rates were expected, but the reality was that there were some decreases as well. With a healthy outlook for the U.S. economy, there are solid indicators that this year that the mortgage rates will be headed upward. Factors that are positively impacting the economy include job growth, higher incomes, and increased demand for mortgages.

4. Changing Tax Environment

The U.S. Congress recently passed a sweeping tax reform bill, which may complicate home buying. The mortgage interest tax deduction methods have been altered, reducing the mortgage debt that buyers can obtain itemized interest expenses deductions when purchasing a first or second home.

Depending on the state you live and work in, these changes could impact housing sales. States with a high tax rate and high sales prices may be on the front lines of decreasing sales, such as California.

5. Don’t Underestimate the Millennials

Throughout the last few years, there has been plenty of talk about the impact of first-time home buyers on the market, and how millennials were shut out of the buying process, particularly due to student loan debt and the difficulty in saving for a down payment. However, their earning power is on the rise, which is impacting their ability to buy their first home.

The impact of living with significant debt means that this generation is embracing creative housing solutions, such as tiny homes and micro units. Mortgage professionals need to be willing to work with a new type of client, one that isn’t looking for a traditional family home, as millennials are poised to make up 43% of the homebuyers looking for financing to make a home purchase.

6. What Changed in Your State?

Throughout the U.S., states have been making changes to their requirements for mortgage licensing professionals. This process includes increasing bonds to ensure better security for clients.

The point for mortgage licensing professionals is that they need to stay on top of the regulations in their state, as part of a continuing education effort meant to prepare you for any of the changes this industry throws at you. To determine the impacts of recent legislative changes in your state, contact us.

All of these trends can impact your business in 2018. By preparing for both increases and new regulations, you can provide your clients with a quality experience in the New Year!

The Mortgage Licensing Group, Inc. is a full-service mortgage licensing firm headquartered in Southern California that is recognized throughout the industry as an experienced and reliable service provider. Established in 2006, our company has been on the forefront of the ever-changing rules and regulations, helping alleviate the often daunting task of meeting the diverse state licensing requirements for our clientele.