What’s next in origination: Rate movements

Today’s HousingWire Daily is the second episode of the Preparing for What’s Next miniseries, sponsored by Black Knight and hosted by Assistant Editor of Content Solutions Jordan White. 

In today’s episode, White is joined by Andy Walden, vice president of market research at Black Knight, and Brennan O’Connell, data solutions manager for Black Knight’s Secondary Marketing Technologies division. Walden and O’Connell discuss what’s next in mortgage origination and the current transition to an equity-centric housing market. 

Here is a short preview of the interview, which has been lightly edited for length and clarity:

Jordan: The historically low interest rates that have defined the market for the last few years appear to be slipping away. Could you give us some insight into why this is happening?

Brennan:  Over the last year and a half, we’ve seen the spread between mortgage rates and 10 year (treasuries) hit historic lows. This indicates the impact of the Federal Reserve buying was stronger on mortgage-backed securities (MBS) and on treasury bonds. The unwinding of that program could have the opposite effect.

 Jordan: Black Knight reports that homeowners have more equity available to them than ever before. How do you see that impacting mortgage lending as we move into 2022?

Andy: If you just look at simple tappable equity, a metric we use to look at how much equity homeowners have that they can borrow against before hitting an 80% CLTV limit on their home, then the average homeowner has gained almost $50,000 in tappable equity over the last 15 months. When you look at it from a lender’s perspective . . . , they’ve seen a $2.5 trillion dollar jump in tappable equity since the onset of the pandemic.

HousingWire Daily examines the most compelling articles reported across HW Media. Each afternoon, we provide our listeners with a deeper look into the stories coming across our newsroom that are helping Move Markets Forward. Hosted by Jordan White and produced by Alcynna Lloyd and Elissa Branch

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