Many lenders are not getting a sense of déjà vu with the current mortgage industry downturn, according to mortgage advisory firm Stratmor Group.
“This one feels different,” a recent Stratmor report states, citing executives in the mortgage industry.
This time around, the fast mortgage rate increase, the large origination volume decrease and margin compression could cause an “unprecedented amount of excess capacity, and many lenders will need to sell or simply won’t survive,” Jim Cameron, Stratmor’s senior partner of Stratmor, said.
Of the top five monthly mortgage rate increases to occur since 1984, three took place during the first 10 months of 2022 — one in September (89 bps), April (81 bps) and October (79 bps).
Meanwhile, forecast volume for 2022 is expected to drop by $2.18 trillion — the largest dollar volume drop in history. At 49%, this year’s forecasted decline would be the largest percentage decline in year over year volume since 1990, according to the Mortgage Bankers Association.
In addition, more lenders are chasing fewer loans, and the speed and severity of this downturn