Housing Market Update


Over the last two years, the housing market has experienced explosive growth, with refinance activity dominating a large portion of origination volume. Looking to the future, lenders are now turning their sights toward purchase activity as refinance applications begin to dry up.

Despite headwinds facing many new buyers today, the demand for homeownership remains near an all-time high. As lenders start to shift focus to purchases, buyers will continue to need multiple financing options as a means to purchase a new home.

According to the National Association of Realtors, roughly 86% of all homebuyers finance their home purchase. Last month at the MBA Nationals Conference in San Diego, CA, its chief economist Michael Fratantoni forecasted 2022 mortgage purchase originations are expected to reach an all-time high of $1.73 Trillion. With that said, refi’s are expected to decline 62% to a total of $860 Billion.

Conditions for buyers should also improve as lenders look for new ways to support homebuyers. “There are quite a few programs that are being introduced to help homeownership. They are geared towards lower FICO scores and higher debt-to-income ratios. Then there are dozens of Down Payment Assistance programs available, and recent credit score changes by Fannie Mae averages the buyer’s credit scores rather than taking the lowest has helped. With these new programs, lenders can now get more buyers approved for a new mortgage and into homes which is mutually beneficial to both parties.” says Ian Shirey, the Director of Operations from Liberty Home Mortgage, a purchase lender located in Cleveland, Ohio, that is licensed in 43 states.

Another example is Bank of America, which has established its Community Homeownership Commitment umbrella, which, in part, includes grant programs to help buyers pay for closing costs or their down payment.

Similarly, JP Morgan Chase also recently announced its expansion of grant programs, especially in minority neighborhoods nationwide4.

With more lenders backing purchase activity, buyers will have more options in terms of their mortgage provider. This will lead to a more competitive environment amongst lenders giving buyers more opportunities to shop multiple lenders, compare rates, and find the best deal.

While historically low-interest rates were one of the biggest reasons why refinance activity boomed throughout the economic turmoil brought forth by COVID-19, recently mortgage rates have started to tick upward, which has a negative impact on the number of homeowners are actively looking to refinance.

Furthermore, the Federal Reserve recently announced plans to drastically reduce its purchasing of mortgage-backed securities in favor of a more contractionary fiscal policy. Consequently, mortgage rates are expected to rise as the Fed tightens spending.

Largely fueled by the millennial population, the real estate markets remain rock solid. However, lenders understand that with shrinking margins and fewer refinance opportunities; they must pivot to capturing more purchase applications and remain profitable

Founded by Brian C. Coester, Daniel Love and Cory Brown Real Estate Connection (REC) helps buyers, sellers, and mortgage lenders achieve a better real estate experience. We partner with lead aggregators, lenders, realtors, and title companies and ensure a seamless transaction for the client. From initial online inquiry to final move-in, Real Estate Connection will help all parties every step of the way get the transaction completed. REC specializes in lead generation, lead management, increasing transaction conversions, transaction management, and a host of other exciting reporting and business intelligence capabilities. If you are looking to grow your lead capabilities, convert more transactions, and inject a better real estate experience for your customers we need to talk. Please reach out to Brian C. Coester at www.realconnectusa.com for more information.


1 National Association of Realtors Research Group. (2021, March 16). 2021 Home Buyers and Sellers Generational Trends Report (Rep.). Retrieved November 12, 2021, from National Association of Realtors Research Group website: https://www.nar.realtor/sites/default/files/documents/2020-generational-trends-report-03-05-2020.pdf

2 Bank of America. (n.d.). Down Payment Grants and Loan Assistance Programs for First-time Homebuyers. Retrieved November

12, 2021, from https://www.bankofamerica.com/mortgage/affordable-housing-programs/

3 Wells Fargo. (n.d.). The NeighborhoodLIFT® Program. Retrieved November 12, 2021, from https://www.wellsfargo.com/mortgage/lift/

4 Chase. (2021, February 17). Chase Expands Grant Program to Help Families Buy a Home and Stabilize Minority Communities. Retrieved November 12, 2021, from https://media.chase.com/news/chase-homebuyer-grant


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