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I recently attended the Northeast Conference of Mortgage Brokers and Professionals at Harrah’s Resort and Casino in Atlantic City. I sat in on a presentation where the general gist of the conversion was that we have seen rates go about a low as they’re going to go for a while. After the election, they said, we should see a Fed rate hike and then a few more in 2017. Nothing drastic but they rates will rise.
The presentation was by Barry Habib, CEO of MBS Highway, and Peter Brookvar, Managing Director, Client Market Analyst, with the Linsey Group. These guys are tied into the markets and what’s happening with rates.
Such a rise will ultimately result in an increase in mortgage rates which may make homeownership a little more difficult for low to moderate income home buyers and millennials carrying high student debt. The question is: Will the increase in rates have the effect of reducing home values? Good question.
We still have an affordable housing challenge in his country resulting from many existing homeowners having refinanced into lower rates and taking much of their home’s equity. This creates less of a supply of homes for sale, especially at the affordable end, coupled with the fact that builders are not building new affordable units.
It looks as though things may get a little challenging for mortgage lenders in the next few years. Start planning now for these rate hikes and what you’ll do to attract new business and serve the needs of the homebuyers at all levels. Don’t continue to depend on new refinance business; it may not be there in the near future.
I’ve noticed many ads on TV and radio for low rates to refinance. It may be a good time to convert that advertising to target new home buyers and educate them on what you have available to help them move up to the home they want. They also need to do it before rates start to rise.
Make sure all loans are of good quality and in compliance with all the new rules. You can’t waste time and money on loans that won’t close, can’t be sold, or worse, may be forced to buy back. That ain’t good for any bottom line.
There will always be plenty of opportunity for business. Put in the planning, training, and technology to get prepared for the next round of home financing. It may a little different once the rates go up. But, if you have prepared, your business and income shouldn’t go down.
