Rates are still on the climb; Lenders are looking to slim down overhead wherever possible… even sale
Yesterday, we saw a huge sell off in the bond market that led to… quite honestly, scary looking rate sheets. Mortgage rates aren’t entirely dependent on the 10-year Treasury note, but for the most part it’s the best barometer we (the mortgage industry) have to anticipate where rates are going to be… after yesterday we saw the 10-year at it’s highest since 2014 at 2.727. Long gone are the days of the sleek 3.5% rate… the reality is that we’re living in the 4% bucket now, so hunker in… because this is when our industry becomes even more of a dog fight than it already is. Price becomes even more important than it already is, your realtor relationships are crucial, you must become even more savvy when selling refi’s and your lender better meet your closing dates because you cannot afford to mess up a possible referral. We’re really going to see what all our companies are made of in 2018 and it’s going to be a lot of fun… hopefully.
So… what can lenders doing to shed unwanted expenses as we begin navigating through this environment? National Mortgage News is publishing a fantastic five-part series on how lenders can become more efficient… and the first part of the series discusses the reduction of sales comps (insert generic crowd boos here), but how can you do that and still retain quality sales talent? No. I’m honestly asking… how do you do that? The article NMW ran doesn’t go into much detail about a strategy to reduce sales comps and increase production. You can’t just simply ask for more and pay less… if it were only that easy and to be honest, retail-centric lenders (heavy focus on Loan Officer only originations) are going to have to get creative when it comes to cutting back expenses in other areas (marketing, facilities, compliance, etc.) to stay as lean as possible this year. I highly suggest reading through the series when you have the time. It goes into better detail about what other lenders are doing to stay as trim as possible in marketing, facilities and equipment, compliance and warehouse line expenses. Here is a link to part-one.
In all seriousness though, I think the competitive landscape is exciting. It’s scary, sure, but it’s times like these that solid business models hold strong. A colleague that I used to work with would tell me… “It’s time to winterize the ship” and now, more than ever I think it’s important for us to winterize our ships… because the foreseeable future looks cold… very cold. (I really wanted to use a Game of Thrones reference here, but I just couldn’t find it… ehh maybe next time… by the way… 2019?! Come on!! I can’t wait that long.)
The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.