In published reports last fall, the International Monetary Fund's Christine Lagarde used the term "The New Mediocre" to describe the low bar by which growth in the post-Great Recession markets is now evaluated. Around the time the "new mediocre" was being discussed at the IMF, The Federal Credit Union asked members of the Credit Union Economics Group for 2015 forecasts in mortgages, auto loans, other loans, GDP, unemployment and other key indicators. The goal of the annual survey, conducted in October, is to help federal credit unions thrive, not just survive, in the coming year. Here are excerpts of their responses.
TFCU: Generally speaking, how is the health of the housing market in your region, and what impact are interest rates and the qualified mortgage rule having on mortgage originations?
CURT LONG: The housing market struggled a bit in 2014. One issue is that first-time homebuyers just aren't there, at least not at levels we're used to. Investors and cash buyers had picked up that slack for a time, but they are pulling back ahead of a likely rise in mortgage rates. Lending standards are starting to ease, but they are still preventing many would-be buyers from entering the market. As rates start to rise, this will place another hurdle in the way of firsttime homebuyers.
We're expecting a moderate rise in mortgage rates in 2015. Refinance activity will continue to dwindle as a share of total originations. Overall, we see 2015 being very similar to 2014 in terms of origination volume, as we get a boost from the improving economy, but also the added headwind of rising rates.
We believe QM has had a large impact on credit union originations. A recent NAFCU survey showed that a wide majority of respondents either ceased to originate or reduced their originations of non-QM loans.
From January-February 2015 issue of The Federal Credit Union Magazine.