MBANow: MBA Chief Economist Mike Fratantoni on Mortgage Industry Outlook

The Mortgage Bankers Association released a new MBANow video featuring MBA Chief Economist Mike Fratantoni, who discusses rising interest rates and the lack of housing inventory whilst giving us his outlook for the mortgage industry thru 2018.  

The video can be viewed at https://www.youtube.com/watch?v=x7w17afGoYc&feature=em-uploademail.                  

Fratantoni noted several dynamics in play during the second half of the year, including a strong economy, low unemployment that could go even lower, slowly improving wage growth and a slowly improving housing market.  

“If anything, [the economy] is too strong right now,” Fratantoni said. “Home prices are growing more than 6 percent per year and that’s really reflecting the lack of supply in the market, so mortgage volume is down because of that. In addition to rising rates, refinances have been crimped, but the purchase market is now being restrained by the lack of supply.”  

Fratantoni noted although housing permits and housing starts are trending up from a year ago, the market remains constrained. “It’s hard enough for home builders with an unemployment rate of 4 percent, but in particular the construction sector is having a lot of trouble attracting workers to build new homes,” he said.  

Looking ahead, Fratantoni said he sees three themes emerging: the job market; actions by the Federal Reserve on the federal funds rate; and housing demographics, particularly the influx of Millennials into the housing market over the next five to seven years and the constraints they could face.  

Other videos in the MBANow series can be viewed at the MBANow website: https://www.mba.org/get-involved/stay-connected/mba-now.