Mortgage Lending Update

Greetings Restaino and Associates!  It is my pleasure to be addressing you and your acquaintances regarding the “State of the Mortgage Industry”.   As I write this and reflect on 2023 thus far, I can’t help but think of what we have all accomplished together.  We together have served our clients with grace despite the business demanding more time, effort, and energy.  I am not sure that the United States Housing Market has ever demanded this much of our industry and clients.  Countless offers and showings, creative lending to the brink on many transactions, emotional roller coasters, site unseen offers, you name it. 

My job as a mortgage professional has changed.  Throughout my career, the main topic of conversation I have had with clients was regarding product, and why.  Don’t get me wrong, product selection is extremely important, however, contingencies in the offer need to be addressed on the lending side as well.  My job has become assisting a client to write the most competitive offer as possible, while still protecting him or her.  Discussing the offer to purchase and contingencies with my clients, in conjunction with the mortgage product, seems to be paying dividends.  Education is the name of the game.  The discussion of contingencies by both the real estate agent and mortgage professional helps to reinforce some idea of how to handle each contingency from the buyer’s perspective.  Furthermore, discussing standard levels of appreciation, bid over ask, market factors, etc. further helps to put clients at ease.  We as lenders should be approaching the mortgage process with the perspective of a financial planning opportunity.  Paying off debt as part of the mortgage solution often helps our clients to afford a higher housing payment. Lenders have also needed to become more creative with product offerings!  At Cornerstone Home Lending, we rolled out CASHEDGE! A hard money backed mortgage with a full guarantee of closing upon issuance of approval. 

A positive of this marketplace is that we have seen local mortgage professionals and companies prevail.  Those companies who primarily concentrate on mortgage lending, who have niche products, and quite frankly those who work on the weekends and are available to listing agents, have seen good success in a down and competitive market.  With that said, the industry outlook is not so welcoming. The Mortgage Banker’s Association is predicting a slow end to the year and a tough start to 2024.  With these kinds of forecasts and economic data being projected, many mortgage companies have laid off staff this year and/or will continue to do so.  A large industry drop off is predicted regarding mortgage loan officers. Some institutions who do not primarily focus on mortgage will be forced with a decision of whether to continue in the arena. The Mortgage- Backed Securities Market(s) have also proven to be quite volatile with large swings being present.  Mortgage companies are experiencing an unpresented margin compression. 

Speaking of the current housing market, the Federal Reserve paused rate hikes in September while stating more were eminent.  This had an immediate impact on increasing mortgage interest rates.  As the Federal Reserve continues to raise interest rates, we should see mortgage rates start to come down.  As the Federal Reserves raises rates, higher unemployment will ensue, consumer spending constricting, and a shrinking GDP.  As these economic realities of a higher Federal Reserve interest rate come to fruition, mortgage interest rates should decline in theory.  Supply and demand continue to play a pivotal role in our local market.  As interest rates come down, more buyers will re-enter the market!  Now is the time to buy if a client can afford said mortgage interest rates. “Date the rate, and marry the house”! We are fortunate that in Wisconsin, refinancing is generally considered to be affordable.

Working for a company that truly wants to serve clients, referral partners, and the community is very rewarding.  Cornerstone Home Lending is dedicated to making the mortgage process as efficient and easy as it can be, while progressively changing the way mortgage business is done.  Cornerstone Home Lending is a solution-oriented company offering many mortgage options!  Those options include FNMA, FHLMC, FHA, VA, USDA, WHEDA, Jumbo’s, ARM’s, Reverse Mortgages, Non-Qualified Mortgage products, non-warrantable condo’s, and Renovation/Construction to name a few.  Cornerstone Home Lending services the overwhelming majority of loans they originate, and underwrites loans in house!

Just as in the past, I look forward to partnering with Restaino and Associates! Please let me know how I can help you and your business. I am available to you anytime as a resource.  2024 is shaping up to be a competitive year again.  What we can do to outshine our competitors is simple.  Education and preparedness will prove to be winning themes!