If you are a good loan officer, you are already getting ready for 2012. Many are asking, what will next year bring to the industry? My advice will be the same as it is in most years … be prepared. Of course, you might ask me, “Be prepared for what?” The answer is—be prepared for everything and anything.
What could happen in the next year? On the negative side …
►Rates could rise and refis could stop before real estate recovers (witness early 2011).
►The budget negotiations and/or Europe could blow up and drag us down into a deeper recession. Great for refis, but not devastating for real estate.
►We could lose a major program such as conforming loans and make it that much harder to Americans to get financing.
Now that you are really scared, let’s take a look at what could happen on the positive side …
►Rates stay low and refis continue as the economy and real estate continues to recover gradually.
►Congress extends higher loan limits, giving us a boost in higher-priced markets.
►As the economy recovers, job creation picks up. This causes household formulation to increase and create even more demand.
►A stronger economy means that real estate prices firm up and therefore, mortgage loans become a better investment. This enables lenders to loosen up on approval standards.
Which way will all this go? Predictions are futile; however, it would not be unreasonable for the markets to land “in between” these options. Yet, all of these scenarios are feasible and that is why you need to be ready for just about everything. How do you do that? You must plan. If you don’t have a business plan for 2012, now is the time to put one in place. What will you do if the refis disappear? How about if the market gets stronger? Obviously this plan must be flexible.
Think I am being coy about what rates will do for next year? Take a look at this quote from Mortgage Daily…
“Fannie Mae has mortgage rates falling in the first half of next year, while Freddie Mac forecasts an increase. In its October 2011 Economic and Housing Market Outlook, Freddie predicted that the 30 year will average four percent in the fourth quarter then rise 20 BPS each quarter through the second-quarter 2013. But Fannie's Housing Forecast: October 2011 has the 30-year falling from four percent this quarter to 3.9 percent in both the first and second quarters of 2012.”
If these agencies, which employ highly paid economists, cannot agree, you will excuse me for not putting my own two cents into the equation. Don’t get lost in trying to predict what will happen. Again, be prepared for anything to happen.
We have not set a date as of the writing of this column, but if you e-mail me at
[email protected], I will let you know when my Business Planning 2012 Webinar is scheduled for December and early January (we hold it two times). You will be able to register for free if you mention National Mortgage Professional Magazine when you e-mail us.
You could just plan for next year and take the rest of the year off. In reality, the pipeline you bring in now could help you make your goals for next year. So we are not suggesting that you abandon production for the planning process. Not knowing how long these low rates will last should be giving you and your clients a sense of urgency.
As a leader, you need to move them off the fence. No, you cannot predict the future. Yet, you do know that there is a greater risk of rates moving up than there is a chance that they will move down significantly. Rates hit historic lows in October and again in early November. Every month that a client waits to refinance, it costs them money if they are in a profit situation. You need to calculate their cost of waiting so they realize the consequences of inaction.
Dave Hershman is a leading author for the mortgage industry with eight books and several hundred articles to his credit. He is also a top industry speaker. If you would like to stay ahead of what is happening in the markets, visit www.ratelink.originationpro.com for a free trial. Dave’s OriginationPro Marketing System can be found at OriginationPro.com and he may be reached by e-mail at
[email protected].
