Magazine article Mortgage Banking

Returning to Our Roots. (Executive Suite)

Magazine article Mortgage Banking

Returning to Our Roots. (Executive Suite)

Article excerpt

FOR THOSE OF US WHO HAVE BEEN IN this business for some time, we keep marveling at the headlines of the past several months: "Housing Keeps the Economy Afloat." "Home Prices Are Appreciating." "Existing-Home Sales Soar to Record Levels." Is the news too good to be true?

Week after week, the media keep the spotlight on the housing market. Amid all the doom and gloom, we are the bright spot. In fact, as I write this, new figures are being announced supporting the resiliency of our industry.

Thirty- and 15-year mortgage rates again dipped to record lows in the week ending Feb. 28, according to Freddie Mac. Thirty-year, fixed-rate mortgage rates are under 6 percent, the lowest in more than 30 years. Even adjustable-rate mortgages have hit new lows. The Mortgage Bankers Association of America (MBA) reports that mortgage application levels are strong, indicating that housing will continue to prop up the economy. Refinancing continues to fuel consumer spending.

But what about the rest of the economy? The equity markets are performing dismally. It is hard to look at our portfolios as they decline month after month. And now it is reported that consumer confidence has taken another nose-dive. On the very same day it was reported that consumer confidence had plunged, existing-home sales posted record numbers.

According to the National Association of Realtors (NAR), the median home price jumped 8.8 percent in the fourth quarter of 2002, the biggest gain in more than 20 years. While the National Association of Home Builders (NAHB) reported its index of builder optimism dipped a bit in early February, it still is at historically high levels despite the cold winter weather in the eastern United States, which normally affects construction activity.

"It would be tough to maintain the super-strong building pace recorded for the past several months," says NAHB President Kent Conine, a Dallas home builder. "But the market fundamentals remain solid, and the current level of builder optimism regarding the single-family segment reflects that."

There is no doubt that low rates have encouraged more home-buying, driving up demand for homes, shrinking inventories and pushing prices ever higher. Low rates also have encouraged a wave of refinancing activity, which has allowed homeowners to lower their monthly payments and use the growing equity in their home as a sort of multipurpose savings account that provides savings, spending money and shelter.

It is the shelter part that we often forget about in this kind of market. We are in a people business, and we have been inundated with just the statistics. There are families and individuals behind these numbers, and we need to keep them in the forefront of our thinking. They are our customers, who have seemed to become invisible with all the media attention on housing statistics and housing's impact on the economy.

According to the U.S. Census Bureau, we now have the highest homeowner ship rate than at any other time in history--68.3 percent. So given all this news about our business, what can we do as mortgage bankers? And what is happening to our key customer-the first-time homebuyer?

As our industry continues to be scrutinized under the media's microscope, it might be wise for all of us who have profited from lower interest rates and the refinancing boom to be ahead of the game by refocusing our collective energies on the requirements of the purchase business. …

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