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As Jimmy Durante used to say, “Everybody wants to get into act.” Lately, it seems like everyone has an opinion on the Fed’s rate outlook. Rising, steady, who knows!
This time, it’s former Fed Chair, Alan Greenspan. When Mr. Greenspan talks about the economy and setting the Fed rates, most people listen. This time, he says rates are due to rise and when they do they will climb quickly (Outlook).
If that happens, what happens to the mortgage rates? Last time the Fed hiked the rate, the mortgage rates declined creating a mini-boom for lenders. Will that happen again? I personally wouldn’t count on it.
So, according to Mr. Greenspan, get ready for higher loan rates. That coupled with tighter credit standards, fewer homes in the “affordable zone”, and a stagnant economy could create some real challenges for mortgage lenders. Especially those who have geared up with more staff to handle recently increased volumes and the additional compliance requirements.
Don’t wait. Whether rates go up or not, loans will become a little more scarce in the near future. I mentioned in a prior blog about expanding product lines to service more buyers. I suggest you look at those avenues seriously.
On the other hand, it’s time to tie your expenses to your income. Look for areas where personnel expenses can be offset by technology or outsourcing. I know it’s nice to think you’re in control by keeping everything in house but not to the extent that the costs are prohibitive.
Quality control and compliance are two areas where you can see immediate returns on any investments. Reviews can be outsourced and defects will be reduced. Fewer costs and less loss.
Weigh the alternatives. Look for the ways to stay in business, grab a bigger piece of a shrinking pie, all while reducing expenses and increasing profits. After all, isn’t that why you’re in business?
The game is changing. Play different. LoanLogics can help.
