Mortgage Industry Trends

Fed Stands Pat and Mortgage Rates Hold Steady

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FED-Holds-mortgage-rates-steady-janet-yellinAccording to the Fed, due to weaker than expected gross domestic product returns, the Fed rate will remain unchanged. In other words, because they don’t see what they would like to see, rather than increase rates, they decided to tap the brakes and evaluate the situation. Umm, where did I hear that before?

Seems like the prudent thing to do. It’s up to the Fed to create an environment where their increase in rates will coincide with an ongoing, improving economy. What they term a “soft landing.”  Not an easy task and it appears they are choosing to err on the side of caution. Smart move.

For now, lenders and borrowers get a reprieve. Not as the result of a train wreck on route to the death house, like the Fugitive. But, this is the result of the Fed’s action to not increase rates, avoiding some lenders’ potential trips to the poor house.

However, if the economy continues to improve, and hopefully it will, sooner or later the Fed will raise rates. When they do, mortgage rates will rise as well.  Lenders cannot rely on continued low rates and refinancing to spur their business. Now is the time to prepare for the future.

As the economy improves, there will be increased opportunities for home purchase financing. You need knowledgeable originators trained in producing these loans. These originators, with realtor and builder contacts, must know how to get and service such customers and their buyers.

  • Are your originators ready to go?
  • Do they have ongoing business relationships with realtors and builders?
  • Are they trained in the process and products needed to service home buyers vs. refinances?
  • Do you offer all the products needed to help them service the needs of these customers?

There will still be plenty of opportunities for business when rates rise. You just need to be prepared to go out and find them and take advantage when they come along.

 

Michael Vitali

About the Author

Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.
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Michael Vitali

About Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.
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