Lots of specialists think that a surge in bank home mortgage lending could be both helpful for brokers and for the wholesale channel. It could be good for customers too, as more competition and liquidity might imply better rates. Hagen isn’t sure yet how much it would help, but it could assist some.
“We have actually heard that banks are getting back into the mortgage market somewhat, not in a meaningful method, but on the margins,” Hagen stated. “That might assist tighten the spreads a little bit. Banks are usually a little bit more competitive with their rates versus the nonbanks that we cover, but not meaningfully. It’s not like they’re going to be offering meaningfully much better rates.”
The encouraging thing that Hagen is seeing up until now is that credit conditions in the market continue to be strong, even with the market headwinds that have hindered rate drops early in the year.
“We still seem like the credit conditions are pretty healthy in the market, for the many part,” he stated. “A tightening of credit, together with some of the volatility that we simply discussed, isn’t truly what we’re seeing. Often you see volatility showing up and rates supporting, and lending institutions tightening their standards. We’re not actually seeing that yet.”
Fannie and Freddie conservatorship
Another idea Hagen stated could improve mortgage rates is the release of Fannie Mae and Freddie Mac from government conservatorship.