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Fannie gave us a little ray of hope by adjusting their first quarter origination volume upward; albeit a little late in the quarter.
They’re estimating total volume at about $384 billion, up from $369 billion.
The breakdown is:
- $217 billion in Purchase business
- $167 billion in refi’s
However, they also adjusted their forecast for the remainder of the year to decline for
- 2nd quarter: $467 billion to $466 billion
- 3rd quarter: $447 billion to $440 billion; and
- 4th quarter: $405 billion to $399 billion.
This obviously is not good news for lenders. But, a lot can happen between now and year-end.
Take for instance the recent clarification issued by the IRS on the interest deductibility of equity loans. Not much good news comes out of the IRS, but this is an exception.
The IRS says that equity loan interest is still deductible when taken against the primary residence and used for home improvements.
Couple this with the fact that homeowner equity is on the rise and at its highest level in years. This is good news for lenders that now offer these loans and an opportunity for new business for those who don’t.
With HELOC rates still relatively low, there are a ton of homeowners out there that may be thinking about tapping into their equity to improve their home rather than sell.
Some may look to make some needed upgrades, so they can sell and take advantage of the opportunities presented by the current housing market.
Either way, there is an opportunity for more business that didn’t exist before the IRS ruling. Prepare to take advantage of every opportunity no matter how small. Every little bit helps.
Additionally, with fixed rates projected to hit about 4.5% by year-end, some homeowners may look to refinance to grab some of that increased equity to pay off some higher rate debt and restructure their balance sheet.
Now is the time to educate homeowners on the options they have to sell, refinance, or tap some equity to do the things they need or want to do. Opportunities like these don’t last forever.
Get the message out about the tax deductibility of equity loans and how this can benefit homeowners with pent-up home equity. Provide them with all of the options so they can make informed decisions. When they do, they come to you for their financing.
Stay close to your customers through continued contact and social media outlets.
If you’re interested, I’ll be presenting a panel at the Regional Conference of MBAs at Harrah’s Conference Center in Atlantic City at 3:15PM on Wednesday, March 28th. Come on down and find out how you can use social media to increase brand recognition and business.
Hope to see you in AC.
