Since interest rates have dropped to around 4 percent and Federal Housing Administration (FHA) premium mortgage insurance dropped from 1.35 percent to 0.85 percent, there has been a surge in mortgage loan applications. And, according to the Mortgage Bankers Association (MBA) there has been growth in first-time home buyer activity.
Due to the FHA mortgage insurance premium decline, a first-time home buyer could save an average of $900 a year on their mortgage payments. FHA applications increased 15.3 percent since the drop in FHA premium mortgage insurance began January 26, 2015. It is estimated that this will enable up to 250,000 new buyers to enter the market and purchase their first home.
According to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, first-time home buyers have entered the market earlier than expected in 2015. Tom Popik, research director for Campbell Surveys, stated, “Market share for first-time home buyers tends to decline throughout the winter and increase in the spring.” This year during the winter months, there has already been a significant increase of first-time home buyers entering the market. It is estimated that if this rate continues, 2015 will surpass first-time home buyer activity seen last year. The winter increase is even more interesting due to the severe weather experiences in much of the country.
Valuation Management Group expects many of these first-time home buyers will be millennials. Look for future VMG blogs on millennial home buyers.
During 2015, the expectation is that home purchases will increase, which will naturally have the volume of appraisals increase. Valuation Management Group (VMG) assists lenders with all their appraisal management services, from start to finish. VMG offers regulatory appraisal compliance, appraiser independence and robust residential and commercial appraisal reviews.
Valuation Management Group is a national, full service appraisal management company that manages the appraisal process for community banks, mortgage bankers and credit unions. We offer the full array of commercial and residential appraisal products and services. We take the appraisal process from ordinary to extraordinary.