| Despite a record-breaking past year in real estate, mortgage lenders are uneasy heading into 2018.
That’s per a number of surveys, most recently Fannie Mae’s Q4 2017 Mortgage Lender Sentiment Survey, released last week. Respondents cited competition from other lenders as their biggest worry in 2018, followed by consumer demand, staffing and market trend changes as the reasons for their negative outlook on profit margins.
Fannie Mae’s survey methodology is not easily accessed, so it is unknown whether “mortgage lenders” includes originators or asset-holders. Furthermore, this is a national survey and Greater Boston is not in lockstep with the rest of the county.
But while the Bay State’s lenders and originators are more positive about the market outlook in 2018 than their nationwide peers, there is an underlying sense of disquiet even here, in one of the hottest real estate markets in the country.
If you’re an originator battling for the top spot in the state, you might as well stop now and adjust your expectations. Shant Banosian at Guaranteed Rate has been the top originator – by a wide margin – in the state for the past four years (as long as The Warren Group has been analyzing loan originator performance). A handful of others appear in various positions in the top 10 rankings throughout those years.
Competition for originations is viciously fierce as the market overheats, even if you’re not going to make it to the top spot. Through November of this year, the state’s top 10 LOs originated 3,133 purchase loans and 2,427 non-purchase loans. That’s 2.2 percent of the 249,791 total loans originated in the state, so while their individual numbers are impressive, there’s still a lot of business out there.
As The Warren Group released last week, the Bay State is on track to have a record-breaking year for the median sale price of a single-family home, and possibly for the number of sales as well, though that figure is currently within a couple hundred sales of 2016’s total. It’s a blood bath out there, and origination might be the easiest part of the process. There’s a clear demand for home loans in Greater Boston; lenders are right to be wary of a market of increasingly anxious buyers and reticent sellers.
There are thousands of would-be buyers throughout the state with great credit, a 20 percent down payment and a pre-approval letter in hand. And they’ll spend every weekend this spring at open houses, desperately trying to find a home to call their own. Their offers will be turned down for cash offers, for offers well above the asking price, for offers without contingencies.
Competition in the market is certainly a challenge, but the demand for a dwindling supply is the real problem. Lenders and originators have no shortage of consumer demand for their mortgage products – but those consumers are increasingly unable to actually use those products.
And that is something about which we all should be very concerned, indeed.
