As bad as originations were this year, 2023 is projected to be worse. Purchase-mortgage business is expected to decline even as mortgage rates come down and home prices level off.

Debt service coverage ratio loans for investment properties are starting to look more risky as the Fed works to address inflation. Still, activity in the sector is increasing.

After a couple of years where annual home price growth averaged 20%, analysts expect prices to flatten or even decline. And it’s possible the conforming loan limit set for 2023 will remain in place for all of 2024.

Borrowers are seeking non-QMs even as interest rates increase. However, investor demand for the loans is mixed.

Borrowers and lenders increased their emphasis on ARMs in the second quarter as interest rates continued to spike. The loans accounted for more than 12% of total originations during that time. (Includes data chart.)

The mortgage exchange will now facilitate originations and sales of various types of non-QMs, with “some of the industry’s most generous guidelines” for the products.

Rising interest rates and home price deceleration could limit fix-and-flip activity, though lenders active in the sector suggest that originations and profits remain strong.

Hearings in Congress with the CEOs of seven megabanks stretched for more than nine hours across two days. The executives touted mortgage programs for minorities and listed their regulatory concerns.

The correspondent channel regained market share lost during the refi boom in the conventional-conforming sector. The retail channel remained the largest source of originations in the sector in the second quarter. (Includes two data charts.)

Rising rates are putting pressure on both lenders and borrowers. Meanwhile, with originations constrained consolidations should increase.