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Here's Why Affordable Housing Will Be Such a Big Obstacle in 2019

Affordable housing protestors

54% of mortgage industry professionals identified rising interest rates as the greatest obstacle facing the housing market in 2019, according to a recent survey executed by Genworth Mortgage Insurance, an operating segment of Genworth Financial, Inc. (NYSE: GNW). The next highest-ranked obstacles were a lack of affordable housing supply (37 percent), GSE reform (seven percent) and the pending expiration of the Qualified Mortgage patch (two percent) according to the survey, which polled 203 mortgage industry executives at the 2018 Mortgage Bankers Association Annual Convention and Expo.
When looking specifically at the first-time homebuyer demographic, a majority (58 percent) of those surveyed cited the sparse availability of affordable housing as the most impactful obstacle to those trying to enter the housing market. Additionally, lack of consumer knowledge about the homebuying process (20 percent) is seen as a barrier to entry by professionals, who also noted interest rates (13 percent) and lack of appropriate credit history (nine percent) as lesser hurdles.

"While rising interest rates and a lack of affordable housing supply continue to drive increase in home prices, first-time homebuyers have not wavered in their efforts to buy homes," said Rohit Gupta, President and CEO, Genworth Mortgage Insurance. "We continue to stress the importance of education and optionality for this demographic to set them up for success. Their growing presence in the purchase market will require continued support and customization as they continue to play a meaningful role and drive demand in the housing market."

Additional findings from this survey are included below, providing insight into industry viewpoints regarding technology integrations, the impact of housing policy and borrower risk profiles.

Technology needed in loan application submission and closing process to improve customer experience
While the housing industry has seen rapid advancement over the past few years due to the influx of new technologies, there is still opportunity for new tools to be introduced that will enhance customer engagement. Eighty-five percent of industry executives believe that integrating technology into the loan application submission process (41 percent) and/or the closing process (44 percent) will provide the strongest improvements to the customer experience. 15 percent of respondents identified either the loan inquiry process or private mortgage insurance as areas where technology could make a large improvement.

Borrowers' risk profiles see minor improvements
While the housing market is expected to undergo some turbulence over the coming year, industry professionals are beginning to notice small improvements in the risk profiles of borrowers looking to enter the market. Of those surveyed, 41 percent noted a small improvement in the quality of borrower they were seeing, while 53 percent saw no change to a small decline in these profiles. At the top and bottom ends, five percent identified a significant increase in the risk profiles they were viewing while only one percent saw a significant decline.

Regulatory policy not likely to support increase in affordable housing
When it comes to fixing the disparity in available housing inventory, a majority of mortgage executives (62 percent) do not believe that regulatory policy changes introduced over the next 12-24 months will support the construction of more affordable homes ($300,000 and below). The shortage of affordable housing options in the market was earlier identified by those surveyed as a major hurdle for new entrants into the market, as well as the overall success of the housing market in 2019.

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 www.genworth.com.

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