2020 is just around the corner and it’s that time of the year when the mortgage rate predictions begin. Experts have pulled up their sleeves to forewarn about how the mortgage interest rates will do in the coming year. There is a lot of curiosity over whether the rates will continue to drop or skyrocket. Those looking to purchase a new home or refinance next year are all ears.
Mortgage Rate Predictions for 2020
The Mortgage Bankers Association (MBA) issued a 2020 rate prediction of 3.9%, on average, for the 30-year fixed-rate mortgage in its September Mortgage Finance Forecast. Mike Fratantoni, chief economist for the MBA, issued a statement that said, “Since hitting a recent high of over 5 percent in November 2018, the 30-year fixed mortgage rate has fallen more than a percentage point, and homeowners have responded strongly to the drop in rates, as more borrowers are now “in the money” and have a rate incentive to refinance.”
Likewise, the National Association of Realtors (NAR) reveals mortgage rate predictions that the rates should remain around 3.6%. In its U.S. Economic Outlook report for October, the NAR officially forecasted this average rate annually for the 30-year fixed-rate mortgage in 2020. The National Association of Home Builders’ (NAHB) mortgage rates forecast calls for a 3.9% average rate for the 30-year fixed-rate mortgage for 2020.
Meanwhile, according to the MBA, refinance activity is expected to plummet in 2020, and purchase originations will increase only slightly. Refinance originations will plummet by 24.5% to $599 billion from 2019 to 2020. The drop in refinances activity will likely occur in the second half of 2020, as per MBA.
In short, most experts mention that interest rates could stick to historic lows in 2020. However, the market is full of uncertainties and the rates may change. The MBA mentions the chance of a recession as a real possibility in 2020, even as soon as the first half of the year.
However, it also says that the health of the labor market plays a significant role in the outlook for housing. “Although job growth is expected to slow along with the economy, overall market conditions look decent next year. Low mortgage rates and millennial buyer demand will be the primary reasons for a slight increase in purchase activity in 2020,” Fratantoni had mentioned at the MBA Annual Conference in Austin.
Smart Mortgage Processing Partner
All in all, the market is not without challenges in 2020. This means that it is imperative to make the most of the situation as it arises. It is, therefore, more important than ever now for mortgage lenders to invest in a smart processing partner who can offer faster loan processing and a better experience for mortgage borrowers. A strong processing partner can offer a host of varied mortgage-related services including pre-underwriting, closing, post-closing, loan processing, title ordering, appraisal, title insurance, and title examination, etc. By outsourcing mortgage processing to a smart partner, mortgage companies can perform better in a competitive and dynamic environment while efficiently maintaining a loyal customer base.
Outsourcing Mortgage Processing in 2020
Outsourcing mortgage services can help companies streamline operations and benefit from improvements in accuracy and efficiency. This is especially important at a time when the coming year is expected to see a slight increase in purchase activity as per expert predictions. George Ratiu, a senior economist at realtor.com, has pointed that real estate fundamentals remain entangled in a lattice of continuing demand, tight supply, and disciplined financial underwriting. He said, “2020 will prove to be the most challenging year for buyers, not because of what they can afford but rather what they can’t find.” This means as demand heats up, driven by the growing number of millennials entering the market, the supply of homes for sale is expected to hit its lowest in history.
Naturally then, given the challenging market conditions, mortgage companies have to make hay while the sun shines in 2020. Mortgage partners will enable companies to close loans faster and maintain the lowest possible cost per loan. Another advantage that such partners will provide is the chance of a fast turnaround time frame and the ability to take up more customers. A processor will work with the loan originator, title and escrow companies, and several others to get all the necessary paperwork to fulfill those conditions and avoid things from getting complicated in no time at all. Outsourcing mortgage processing will prove to be a likely way to increase customer satisfaction, as fines, errors, and troubleshooting are minimized.
As we near the end of 2019, lenders can benefit greatly by investing in the right loan processing company to empower their business. PrivoCorp is one such mortgage loan processing company that can enable you as a lender to close more loans without increasing the existing staff or adding additional office space. To avail, some of our expert services, come talk to PrivoCorp now!