Genworth Survey: Surging Demand, Tighter Inventory, Create New Opportunities, Risks in Mortgage Lending

RICHMOND, Va., June 21, 2016 /PRNewswire/ -- Genworth Mortgage Insurance ("Genworth"), a subsidiary of Genworth Financial, Inc. (NYSE: GNW), today released results from its study of industry executives conducted at the 2016 Mortgage Bankers Association Secondary Conference in New York City. Key findings showed that, when forecasting existing home sales, 78 percent of respondents expect first-time homebuyer market share to either continue at current levels or increase by at least three percentage points.  This surge in new purchasers has driven demand, leading to tighter inventory. 

"Our industry, via this year's survey data, acknowledges the first-time homebuyer's rise as a key component of the homeownership mix," said Rohit Gupta, President and CEO of Genworth Mortgage Insurance. "To support this demand, we must stay true to the great strides we have made in improving underwriting quality, making private capital available, and expanding the availability of prudent and affordable low down payment mortgages.  Under these circumstances, it is important that all industry participants continue work to ensure we have an accessible, efficient, and innovative environment for new mortgage originations."  

First-Time Homebuyers Creating Excess DemandAs mentioned, when forecasting existing home sales, almost eight of every ten (78 percent) respondents expect first-time homebuyer market share to either continue at current levels (47 percent chose this option) or increase by at least three percentage points (31 percent chose this option). Twenty-two percent expect to see a decrease of at least two percentage points.  The added demand created by this group has played a factor in the tightening inventory seen in today's housing market. 

But Home Accessibility Still an IssueWhen identifying the top obstacle limiting borrower access to mortgage credit, 64 percent of respondents cited the lack of a sufficient down payment. An additional 16 percent believe a lack of adequate income when applying for a loan was the greatest obstacle. Nine percent indicated home price affordability was the biggest hurdle, and an additional eight percent cited poor borrower credit scores. Only three percent of respondents believe there are not any major hurdles with borrowers' access to mortgage credit in today's environment. 

So Lenders Look for Alternate Solutions to Meet Demand The return of piggyback mortgages (80-10-10s) is a growing concern for industry executives. At this year's MBA Secondary Conference, 49 percent of respondents expressed concern about the return of this vehicle, whereas only 38 percent of respondents voiced the same concern in Genworth's 2014 MBA Annual Conference survey. Of the 49 percent who expressed concern in 2016, 31 percent believe those who sign up for these loans may not understand the full risks involved, and 18 percent believe borrowers run the risk of over-levering themselves. The 51 percent of respondents who do not view piggybacks as a concern believe borrowers are responsible for their own decisions. 

Technology: Industry Sentiment Still Divided While many firms in the industry have begun investing in improving their technological infrastructure, these investments can carry long lead times before showing a true impact.  This seems to be influencing the industry's perception of where it ranks in terms of technological integration.  Almost half of respondents (49 percent) believe that technological integration into the home lending process is subpar. This represents only a three percent improvement from when Genworth asked the same question to industry executives at the 2014 MBA Annual Conference (52 percent at the time believed technology integration was subpar).  Thirty-eight percent of respondents believe that technology integration today is average, and only 13 percent believe technology integration is strong. 

Methodology: The survey of 120 mortgage professionals was administered in person at the Mortgage Bankers Association Secondary Conference in New York City from May 16-17.

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 Mortgage Insurance