TheMReport — News and strategies for the evolving mortgage marketplace.
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Th e M Rep o RT | 33 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t ORIGINATION the latest ORIGINATION Jumbo Offerings Open Up credit access An increase in demand for high loans grabs lenders' attention. t he Mortgage Bankers Association's (MBA) Mortgage Credit Avail- ability Index (MCAI) increased 0.44 percent last month to 114, the group reported, indi- cating a loosening of credit. While lending regulations have played a role in credit shifts over the past few months, MBA chief economist Mike Fratantoni explained March's increase had more to do with lenders refocus- ing their priorities. "Consistent with past months, many lenders and investors are providing borrowers seeking higher loan amounts with a broader range of financing op- tions by introducing new jumbo loan programs," Fratantoni said. "Over the month, some lend- ers made a complete exit from wholesale lending operations, while other lenders moved to enter that space or expanded operations." MBA says the increased avail- ability in jumbo loan programs is consistent with findings in its Weekly Applications Survey, which has shown growth in purchase volume for high-loan applications and contraction in volume for low-balance loans. "Lenders are likely moving to create a broader range of jumbo products in order to capture the increasing demand for such financ- ing in the market," the group said. agents Predict competitive spring season Buyers need to come out of the gate strong if they want to stay clear of the fray. a survey released by Redfin showed that nearly half the company's Northeast agents and about 40 percent of its Midwest agents believe com- petition among buyers will be far more fierce this spring. The bedrock of these beliefs lies in a combination of low inventory and an end to the winter hiberna- tion among potential buyers in ar- eas hit hard by the 2013–14 winter. Most of the 435 Redfin agents, sur- veyed in 26 U.S. markets, said that unusually harsh weather in the Northeast, Midwest, and Southeast kept buyers away all winter. But now the homebuying market is heating up with the spring, and sellers are anticipating reaping the benefits of increased interest among buyers—so much so that more sellers are negotiating to rent their homes back from buyers for several months to give themselves time to compete for their next home. "In this competitive market, it is very challenging to sell a home and buy a new one without becoming temporarily homeless," said Jeremy Cunningham, a Redfin agent based in northern Virginia. "For buyers, being sensitive to this challenge, or even offering a rent- back agreement upfront, can help their offer stand out." Low inventory in major Northeast and Midwest metros such as Chicago and Boston ups the ante for competition among buyers. So does the trend toward migration among buyers, who are increasingly looking farther afield for homes, the survey found. One Boston agent, Adam Welling, stated that bidding wars there are already heating up significantly for this reason. "The difference this year is that competition has spread," Welling said. "With inventory so low, homebuyers are expanding their search, and neighborhoods that didn't have multiple offers last year are now seeing heavy competition." Redfin's agents said the bal- ance of power now tilts toward the seller, especially in the West. About half the agents in all mar- kets said that sellers have a little more power than buyers. But in the West, where weather is no factor but inventory is, agents said that sellers "have all the power." A February report from Redfin showed that escalating home pric- es in the West have held potential buyers back. Whether this will put power in the hands of the fewer buyers braving the market or in the hands of sellers who can ask higher prices remains to be seen. "In this competitive market, it is very challenging to sell a home and buy a new one without becoming temporarily homeless." — Jeremy Cunningham, Redfin