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TH E M R EP O RT | 23 FEATURE Mortgage, observing that the low inventory was also affecting the purchase loans market. "Homes may not be so "overvalued" today, but rather, "overpriced, with a severely limited supply of afford- able housing." Looking at 2019, Whittemore projected that although the pace of home price appreciation was slowing, forecasts for 2019 still showed a 4-6 percent home price growth annually across the country with some markets in California seeing double-digit growth. "If home price growth continues to exceed wage growth, the spread for a first- time homebuyer will continue to be a problem until rates come down, home prices drop, or wages grow. I don't see the latter happening fast enough." However, home prices have been softening in the recent months and Taylor projected that this trend is likely to continue into the next year. "Prices may come down a little bit because ul- timately, people are trying to price to what somebody can afford to buy the house at." The forecast though calls for a slowing in the rate of appreciation to about roughly 3-4 percent over the next couple of years. "I think that's good and that it's really im- portant that we see a slowing in home price growth," Nothaft said. 4. Rising Equity P rices and home values will also be the biggest opportuni- ties for growth for some of the markets, especially those that are seeing a rising influx of homebuy- ers from the more unaffordable markets. "If you look into the open West, meaning markets like Reno, Carson City, Boise, Coeur d'Alene, Provo, and Salt Lake City, all these medium-sized Western markets are booming of an outflow from the unafford- able West Coast coastal markets like San Francisco, San Jose, Los Angeles, and, to a lesser extent, Seattle," Khater said. And while prices are likely to soften, homeowners have seen their equity grow manifold over the past few years. In fact, ac- cording to a TransUnion study, household home equity, currently nearing $15 trillion, has surpassed its prior "housing bubble" peak in Q1 2006 by over $1 trillion. "Home equity levels have been rising at a rapid rate each year since hovering around $6 trillion between 2009 and 2011. While the S&P/Case-Shiller House Price Index (HPI) increased by 42 percent between Q1 2011 and Q1 2018, home equity levels outpaced home prices in that same time- frame," the study revealed. For lenders, already grappling with drying up refinance loans, this could provide a world of opportunity, especially in home equity lending. According to Joe Mellman, SVP and Mortgage Business Leader at TransUnion, "The recession caused a home equity lending pull-back, which all but eliminated consumer mar- keting and education. We think there's an opportunity to re-intro- duce that education to consumers and help them evaluate how and when tapping home equity could make sense." Mellman was particularly optimistic about the long term rise of home equity lines of credit (HELOCs) moving forward. "HELOC's are going to be a pri- mary driver of home equity lend- ing products," he said. "We have observed that this segment has been growing for the past seven years and will become even more important as cash out refinanc- ing options decline because of the rising mortgage rates." But HELOCs aren't the only opportunity for lenders going into 2019. 5. Innovation in Lending W e're seeing a lot more non-QM products and similar types of loans coming to the market. People are looking to expand their credit box and see what types of different loans they can put in the marketplace and what the appetite might be from the investor base," Taylor said. "The higher the interest rate, the higher the payment, the more risk tolerance people will be willing to take from a non- QM type loan, and the expan- sion of these mortgage products into different areas." According to Taylor, inventory may affect the purchase loan mar- ket especially since "the refinance market has dropped off signifi- cantly and the purchase market is much more of a focus for all lenders." In such a case, lenders who invest in technology and streamline operations are likely to see the best opportunities come their way in 2019. "The biggest trends for me are how all lenders, whether they're a bank or an independent mortgage lender, are having to actually successfully utilize technology in order to strengthen their reach to the customer base," Taylor said. "It's not as simple as going ahead and buying technology and implementing it, but implement- ing it correctly and making sure that the people and technology work together to be able to reach their intended customer base and provide a much more dynamic customer experience, whether it be to digital solutions, telephone or anyways the borrower wants to interact." Clarke concurred, saying that while technology had the po- tential to improve the overall mortgage process by streamlining many of today's cumbersome pro- cesses, there was a significant de- mographic of borrowers that still wanted to work intimately with their lender. "Lenders will want to use technology to enhance their relationships with borrowers and help them make smarter mortgage decisions. This will help lenders build stronger, lifelong relation- ships because after all, technology is not here to replace us, it's here to complement how we work on a day-to-day basis." Despite falling delinquen- cies, lenders will also be look- ing closely at this trend as the market takes a pause in 2019. "As a default executive, for me, what will be key in 2019 and beyond in the new world is less macro and more microtrends. The future will require you to identify patterns and behaviors at a much more granular level in order to effective- ly understand and manage your default," Whittemore said. According to Mellman, "No one talks about delinquencies right now because they are at all-time lows and have been experiencing a decline year-over year. But while there's nothing to worry about in delinquencies yet, I would always want to keep an eye on those as the housing market evolves." What Will You Bring to the Table? A t the end though, 2019's hous- ing market will be one where lenders will be set apart from each other through the additional value they bring with each and every deal—whether it is for homebuyers or owners. "This means provid- ing educational resources for borrowers, having strong partner relationships, and an efficient or nimble operations team," Clarke said. "Lenders in 2019 will want to think of themselves as teachers and coaches for their borrowers—guid- ing them through the mortgage process to ensure they're making the best decision for their given financial situation." RADHIK A OJHA Online Editor at the Five Star Institute, is a graduate of the University of Pune, India, where she received her B.A. in commerce with a concentration in accounting and market- ing and an M.A. in mass communica- tion. Upon completion of her master's degree, Ojha worked at a national English daily publication in India (The Indian Express) where she was a staff writer in the Cultural and Arts Features section. Ojha also worked as Principal Correspondent at HT Media Ltd. and at Honeywell as an executive in corporate communications. She and her husband currently reside in Dallas, Texas. You can contact her at Radhika. Ojha@theMReport.com.

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