|Yesterday afternoon, S&P Global Ratings held a webinar to discuss the U.S. Municipal Housing Sector 2018 Outlook it distributed a few days earlier.
The Outlook and webinar described the outlook for HFAs as stable and highlighted their increasing profitability and diverse revenues as positive factors; 80 percent of the 23 HFAs that S&P evaluates entered 2018 with an "AA" rating.
A major contributing factor for S&P’s positive outlook for HFAs was the return of HFAs’ equity ratios to pre-recession levels. HFAs shifting towards self-servicing their loans or outsourcing their servicing rights to other HFAs was also seen as a credit enhancer.
The report predicts that demand for HFA mortgage lending is likely to remain strong and positive economic factors should support all types of housing issues, including bond-financed single-family mortgage programs. The report expects that HFAs will gravitate more towards Mortgage Revenue Bond financing for their single-family programs as interest rates continue to climb, but sales of mortgage-backed securities on the secondary market will finance roughly seventy percent of HFA single-family programs in 2018.
On the webinar, S&P stated specifically that all HFA multifamily programs have a stable outlook despite the negative effect the lower corporate tax rate might have on revenues generated by HFAs’ Housing Credit developments.
A recording of the webinar is available online.