home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News

 

Mortgage News

HOT Topics

production

servicing

compliance

legal

fraud

secondary

jobs

appraisal

site map

www.loan-academy.com/
twitter linkedin
facebook google+
Search:

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

Stories For Salespeople
Loan originator and broker news and stories. Advice about improving mortgage loan originations. Insights to and profiles of mega-producers.
sales stories | sales books | originator newsletter




Industry Commentary


Success Strategies for Rising Rates

Some loan program thrive in higher rate environment

May 25, 2004

By DAVE HERSHMAN


With rates going up, the question often arises; What can I do to make sure I succeed in what looks to be a more difficult selling environment?

Success is not an accident. It is always accompanied by a plan. There are many aspects of this plan that will help determine whether you will be successful as rates go up. Not the least important of these is focusing upon areas that are more likely to thrive in higher rate environments. Not every area of origination goes south every time rates go up.

Purchases
While refinances are already dropping, the real estate market is likely to stay strong. A large move in the purchase market would be 10% to 20% downward. The refinance market can plummet by 60% or more overnight. You are part of the real estate industry at all times and cannot afford to ignore purchases. The key is learning how to deliver value to this market segment. Many loan officers feel they can ignore purchases -- but not only are purchases anywhere from 30.% to 70% of the overall market (depending upon how strong refinances are) -- they are the bastion of our industry.

ARMs
As rates go up, a larger portion of the mortgage market will turn to adjustable rate mortgages. Those considering adjustables will opt for more short-term adjustables (say a 3/1 instead of a 5/1). Indeed, the Mortgage Bankers Association has already reported the highest market share for ARMs in the past 10 years. Don't be surprised to see ARMs soar past more than half of the loans we produce if rates continue to rise. This is one reason the real estate market may not be as adversely affected as expected by rising rates. Purchasers just simply finance their purchases with adjustables -- keeping their monthly payment the same as before rates went up. Never will this concept be more true than now with interest-only mortgages being so popular.

No Cost Loans
When rates go up -- the mortgages written at higher rates will be utilized on the average for a shorter period of time. This is another reason why adjustables make more sense as rates rise. In addition, consumers should invest less money obtaining these loans. This is interesting because it flies in the face of human nature -- when rates go up -- many use points to buy the rate down. But if the loan does not last very long -- this money invested will be wasted.

Subprime
Higher rates affect the levels on the "A" credit loan market more profoundly than they do subprime loans. When someone needs to consolidate debts -- the short-term pain is great and they need to act quickly regardless of present rate environment. Of course, more of these homeowners will chose adjustable rate mortgages. Experts have predicted that the subprime market will represent the strongest sector of the mortgage market in the next two years.

If you are setting out a plan, it should revolve around the targets that are more likely to be productive in today's economic environment. A few words of caution, however. One thing I can always say about this industry is that it will change -- and in ways we do not expect. So don't be surprised if rates move in the opposite direction as expected. Therefore, your plan must be one that will fit in the long run. If it takes too long to change directions, you will be left holding the bag. If it helps you when rates move up, but you have to completely start over when the next trend takes place -- you will be on the proverbial treadmill. A strong and diverse marketing plan will help you get off the treadmill.


Dave Hershman is a mortgage industry author and speaker -- with 8 books and hundreds of articles to his credit. He also heads OriginationPro.com Mortgage School. You can email Dave at [email protected].


click here for more articles by Dave Hershman



SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter

MBS

mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders