Genworth Mortgage Insurance Industry Survey: Rising interest rates and alternative mortgage products seen as biggest 2018 market challenges

RICHMOND, Va., July 11, 2018 /PRNewswire/ -- Genworth Mortgage Insurance, an operating segment of Genworth Financial, Inc. (NYSE: GNW), today released the results of its survey of 105 mortgage industry professionals conducted at this year's Mortgage Bankers Association's National Secondary Market Conference & Expo in New York City. Notably, 79 percent of respondents cited both rising inflation as a trigger of higher interest rates (49 percent) and the re-emergence of alternative mortgage products (30 percent) as the two biggest challenges facing the mortgage market in 2018. An additional 17 percent cited the loosening of credit standards, and four percent cited excess liquidity in the mortgage market.

"Rising interest rates and inflation, when combined with today's inventory shortage, are accelerating home price appreciation, causing some lenders and consumers to explore less-tested methods for financing home purchases," said Rohit Gupta, President and CEO, Genworth Mortgage Insurance. "Despite this, private mortgage insurance is experiencing another strong year, particularly among first-time homebuyers, as the majority of consumers and lenders still prioritize financing solutions backed by tested, well-capitalized businesses. We encourage prospective homebuyers to continue educating themselves on all available options prior to pursuing homeownership, and to ensure that their financing method is as sustainable as it is affordable."     

Additional data shows that the majority of industry executives believe removing legal uncertainty for lenders originating FHA loans (44 percent) and lower compliance cost for lenders (30 percent) are the best ways to improve access to credit in the mortgage market. Additional responses included adoption of alternative credit scores (14 percent) and more ambitious affordable housing goals for the GSEs (12 percent).

Further findings below highlight industry sentiment on the role of compensating factors in underwriting, navigation advancements in loan processing platforms, and GSE Day One Certainty tools:

Compensating factors should play a role for borrowers above 45-DTI
Industry professionals universally agree (92 percent) that given the recent rise in Debt-to-Income (DTI) limits, compensating factors should play a role for an above 45-DTI applicant. Only eight percent said that high DTI limits will facilitate more credit access, allowing more individuals to achieve homeownership without adding risk to the market.

Industry calls for easily customizable dashboards for LOS platforms
The majority of respondents (54 percent) identified easily customizable dashboards for organization-wide production management as the top service they want integrated into Loan Origination System (LOS) platforms. Respondents also noted the ability to share screens and data with a customer (21 percent) and the ability to upload lists of closed loan data to active commitments (20 percent) as desired services.

Industry has started to incorporate GSE Day One Certainty tools
Sixty-eight percent of respondents said that they have begun to integrate or have already fully integrated GSE Day One Certainty tools into their processes. However, about one third of respondents (32 percent) report that they have still not begun using third-party data validations on DU/LP loans.

About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a Fortune 500 insurance holding company committed to helping families achieve the dream of homeownership and address the financial challenges of aging through its leadership positions in mortgage insurance and long term care insurance. Headquartered in Richmond, Virginia, Genworth traces its roots back to 1871 and became a public company in 2004. For more information, visit genworth.com.

From time to time, Genworth releases important information via postings on its corporate website. Accordingly, investors and other interested parties are encouraged to enroll to receive automatic email alerts and Really Simple Syndication (RSS) feeds regarding new postings. Enrollment information is found under the "Investors" section of genworth.com. From time to time, Genworth's publicly traded subsidiaries, Genworth MI Canada Inc. and Genworth Mortgage Insurance Australia Limited, separately release financial and other information about their operations. This information can be found at http://genworth.ca and http://www.genworth.com.au.

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SOURCE Genworth Financial, Inc.