Most EPIQ Attendees Expect Little Change in Rates and Slower Price Growth

But they are split on whether delinquency rates rise or fall

By Frank Nothaft Housing Affordability, Real Estate

EPIQ 2019 attendees represented a broad cross-section of industry professionals, think tank researchers, and government policy makers who have a view on the interest rate, home-price and loan performance outlook.  These are three of the economic variables that affect housing activity and portfolio risk management.  During my outlook session, I polled the attendees to learn their expectations for one year from now.

What will fixed-rate mortgage rates be at EPIQ 2020?

Mortgage rates had moved more than a percentage point lower from November 2018 to late July when EPIQ 2019, CoreLogic’s annual client conference, was held.  Attendees were asked what they expect the level of mortgage rates would be in one year, at the time of EPIQ 2020. 

Most EPIQ Attendees Expect Little Change in Mortgage Rates

The majority, 51%, expect mortgage rates to be very close to where they were during our conference. (Figure 1) The remaining respondents were nearly equally split between mortgage rates dropping or rising by 0.5 percentage points.

How much will the CoreLogic HPI change by EPIQ 2020?

Nationally, home-price appreciation has decelerated over the last year.  Comparing the 12-month change in the national index, growth measured by the CoreLogic Home Price Index (HPI) had slowed by nearly 3 percentage points between May 2018 and May 2019.  The attendees were polled on what they expected the one-year price change would be with the release of the May 2020 HPI, the latest that would be available as of EPIQ 2020.

Most EPIQ Attendees Expect Slower Home-Price Growth

A majority, 55%, expect home-price growth to continue to slow in the coming year. (Figure 2)  Even so, 11% of attendees expect an acceleration in single-family price growth next year to more than 5% appreciation.

What Will the Delinquency Rate Be by EPIQ 2020?

The total past due rate for home mortgages peaked at 12.0% in January 2010 and has steadily moved lower on a year-over-year basis.  As of May 2019 the 30-day-plus delinquency rate had dipped to 3.6%, the lowest in more than 20 years.  EPIQ attendees were divided on how the delinquency rate would evolve over the next year: 32% expected further declines while 43% foresaw a rise. The median response was for little change in the overall delinquency rate in the coming year.

EPIQ Attendees Were Split on Delinquency Rate Direction

Attendees’ projections were affected by a variety of assumptions each had for how the economy and the housing market may evolve, reflected in the forecast distribution.  Nonetheless, a majority of attendees expect interest rates on 30-year fixed-rate loans to remain close to where they were during EPIQ and expect further slowing in home-price growth during the next year.

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