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According to Fannie Mae’s recent Mortgage Application Survey, loan apps are up for the second straight week. Ironically, although rates are rising, refinance loan applications rose 2% over last week, while purchase business dropped by 1%.
While that was going on, home prices overall rose by about 6% and rates for conforming conventional loans increased to their highest level at 4.64%. On the other hand, rates for jumbos decreased ever so slightly to 4.56%. Still not a bad deal.
Noticeably, with fixed rates and home price on the rise, the rate on a 5/1 ARM decreased from 3.85% to 3.61%. Nice drop.
This is helping some buyers better navigate the purchase market as the ARM loan share increased to 7.3% of all loan applications.
What does it all mean? Don’t get too excited. Although refi’s increased slightly, I don’t believe we’re headed back into a big refinance market anytime soon. Purchase business will be the way to go for the foreseeable future.
There will be business in this market. But, you’ll need to work a little harder to get it. Here are some suggestions that may help to increase your purchase business, if you’re not already doing so:
- Government and USDA loans
- A call to ARM’s
- Reverse Mortgages
- Wholesale/Correspondent lending
Whether you are, or will, utilize these options is entirely up to you. If you do, be sure you’re well prepared.
Although each of these may help you to increase your business, each comes with its own specific challenges.
You don’t want to just jump into any of them without having trained loan originators and support staff, with well-written policies and procedures, and the technology to monitor and audit activity.
As I’ve mentioned in past posts, you also need to be out on social media and the internet with your message. Consistently posting information about your company, your products, and services. Post testimonials from past customers, with things like videos of satisfied borrowers at their closing. Do more than plain static advertising. Use marketing that will bring your company to life.
Regardless of which way you decide to go, loans will be tough to come by so each one will count. That means that everyone involved will be pushing for the deal to close; realtor or builder, seller, buyer, and LO.
You may need to push the envelope to help get more loans approved but don’t go too far. One bad loan can spoil an entire month’s worth of originations.
Remember, as tough as it may seem, loan quality and compliance are just as important to your continued success.
Hey, let’s be careful out there…
Note: The quote “Hey, let’s be careful out there” comes from the police drama ‘Hill Street Blues’ which ran on NBC from 1981 thru 1987. (146 episodes)
