Is Now the Time for Lenders to Focus on Purchase-Centric Lending Policies?
There is no question that there are changes happening in the world of construction. Many of these changes are for the better, but companies need to find a way to grab ahold of the change – not fight it. At ECL Software, we offer unique solutions to construction collaboration issues and can help with fund control too.
We are also always keeping an eye on the changes and how our clients can best make the most of them. Today we will go over some reasons that now might be the time to consider purchase-centric lending policies. If you have questions about our products or would like a free demo, contact at 800-625-5972.
A Look at the Stats
To understand what is happening, we must look at the stats we have. Freddie Mac has forecasted a 45% drop in refinance rates in 2021. They believe that the 2.2 trillion dollars of refi business that originated in 2020 is going to drop to about 1.2 trillion this year. This is enough for anyone to pay attention, but it is not the only issue. Consider too that demand has outpaced supply. Freddie Mack believes that we will need more than 1.5 million new homes constructed in the next decade to keep up with demand.
Why the Surge in Purchase Volume?
Lenders are wise to expect a surge in purchase volume for a number of reasons. First, we have historically low-interest rates. We also have many new potential buyers heading to homeownership. According to other data from Freddie Mac, there are 50 million millennials looking to create new households, and many of them are ready to take on a mortgage. But are lenders ready to loan the money needed to build the new homes that will be needed?
Freddie Mac further estimates that the impressive 1.2 trillion dollars in purchase volume from 2020 is going to be up 16% to 1.4 trillion dollars in 2021. For this and other reasons, many are pointing to lenders and their needed to focus on purchase-centric methods.
If you are a purchase-centric lender or are looking o become one, then there are a few strategies you can implement:
- Talk to real estate agents about products that support the purchase market
- Research best practices, such as the idea of gaining a partner in a warehouse bank that better understands renovation/construction lending
- Building relationships with referral partners
These are just a few of the ideas we’ve seen as we keep our eye on the pulse of the latest in real estate news. If you are in need of software that can get your company to the next level, contact ECL Software at 800-625-5972 at your convenience.