State of the Mortgage Market for October 2007

By Michael Mapes, The Responsible Mortgage Lender.Com

 Having just returned from the annual conference of Mortgage Bankers in Mass.  I left with not the same good feelings about our industry as when I went.  During this three day conference we or should I say the mortgage bankers that actually went.  Were not so delighted to hear the news coming from key executives at various mortgage banking firms across the country. 

Having set foot onto the convention floor I was convinced that 2009 was going to be the turn around year for our industry.  Today I am not so sure.  The key highlight and eye opener for me was that amount of inventory unsold across major urban areas.  For example today the entire state of Florida has a 3 plus year standing inventory, with still more to come.  Foreclosures from the the second and thrid quarter of this year have not yet hit the market for sale and lastly, the mortgage credit markets will go through another round of tighting to bring lending standards back in line with pre-1998/99 guidelines.

These three factors could lead to more housing price declines in the Midwest, Florida and California.  Bringing underwriting standards back down to pre-boom levels will cause further deterioration in the housing prices across the nation.  In addition to that most builders will find the cost of building a home much more expensive than the actually selling price.  This further complicate a complicated problem.  Most executives believe that the above markets will not recover until 2010 and beyond.  Most seem to place the blame on brokers who pushed stated income, no ratio and sub prime loans with out regard to peoples ability to repay.  However, the consensus was that some parts of the country will start to recover in 2008, while others like the Hampton Roads Market in Virginia will experience little to no price decline and others such as Florida and California will not recover until past 2010.

For Now it seems that interest rates are very favorable which is holding up the industry, A half percentage point movement upward and we could be in for a long long winters nap.

Michael Mapes can be reached for comment at 757.599.1810 ext 225 or on the web at www.theresponsiblemortgagelender.com