As the word loan broker, itself suggest its meaning that middle man between borrower and lender who helps the borrower to find a compatible deal from different financial institution. With every passing year you can see the changes in mortgage market due to innovations and upcoming technologies. Experts share their predictions on the market trend of loan brokers showing a rise in price and increased demand, which will continue in 2017. In 2015, the rate of interest rises to what we see now in 2017, which is when the Federal Reserve raised the interest by 0.25%. This is a general misconception that rise in rates will lead in higher mortgage rate.
According to a research in 2017 following facts are derived:
- You can easily notice that in 2016 first time buyers contributed around 61% and this trend is expected to continue its growth in 2017, which may result in a rise in ownership.
- Price will continue to rise according to expert’s opinion.
- Interest rates are showing a trend to rise which will make difficult for buyers to buy home of their dreams.Rates are expected to increase but not more than 4.13% for a fixed rate 30-year loan. In addition, the rate fell around 0.01 to 3.23% for 15-year fixed rate. So, refinancing is not a good option if you want a lower rate of interest. Higher rates can constrain property deals by making it less affordable for customer but on same hand it will provide incentive to borrowers to reduce risk.
- Although the trend for loan brokers is showing higher rates in future, mortgage credit opens its arm widely and welcomes borrower.
- Federal housing administration may lower its fee for first time buyers, thus lending a helping hand to a boom situation.
- New homes construction is getting green signal, and the builders are encouraged from high demand from buyers.
- Financial legislation can interrupt in working as it is making excess rules and regulations, which can cause problem in following.
- Credit worthiness should be improved, which means a person’s ability to repay its debts. It can also be termed as credit score. Credit score is a three-digit number ranging from 300 to 850, 850 is the highest score a borrower can get. It is calculated by seeing previous records of a person, or you can say credit history, which has information about credit accounts, amount owned, how long each account was opened, bills payment on time or not etc.
- Debt-to-income ratio is a measure of your ability to manage payment, which means making a good balance between debt and income. It is calculated by dividing total recurring monthly debts by gross monthly income in percentage form. The highest DTI is 43% and can be as low as 36%. The lower is DTI, the more chance of getting loans with loan brokers.
- According to conservative approach you should not spend more than 30% of your ability to pay for home which includes property tax, home insurance and association fees of owner, mortgage etc.
Due to increase in mortgage rates you can see that even small change will make big difference in monthly payments. 2017 gives you a chance to increase credit score and debt-to-income ratio to make out the best rate available in this market. From intermediary perspective, it can be seen that mortgage market is sharing 70% of retaining and building home. New technology will also grow and hence loan brokers can guide you better on the same. Other developments that might be seen in 2017 are joint borrower or sole proprietor deal.