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How to Succeed as Interest Rates Rise

Tom Hutchens
May 06, 2018
Home prices were up 7.6 percent on a year-over-year basis in October, according to new data from Redfin

Because the most recent changes in the mortgage marketplace have disrupted consumer assumptions about home financing, today’s top Loan Originators must be expert advisors to homebuyers, not just diligent salespeople. The steady rise in interest rates will weaken production for Loan Officers unable to explain why the benefits of homeownership are tremendous, despite some increase in cost.
Fortunately, Loan Officers and their customers can take advantage of diverse new mortgage products to make solid, forward-thinking decisions in a time of rising interest rates.
I recently partnered in an Angel Oak Webinar with Barry Habib, Chief Executive Officer of MBS Highway, and one of our industry’s best-known commentators.
“The low hanging fruit is gone,” Barry told the Webinar attendees. “The ratio of refis to purchases has flipped from 60 percent to 40 percent refis, to 60 percent to 40 percent purchases. Today, successful Originators have to counsel people on why it makes sense to buy a house even when rising interest rates increase monthly payments.”
To replace refi business and help people decide to buy now, Originators will need to understand the benefits of non-agency loans. Loan Officers must be able to prove why consumers who cannot get agency loans should not wait for improved personal situations before buying. To do that, savvy Loan Officers can demonstrate the many advantages of establishing home equity.
That is why Barry and I teamed up on the Webinar, ( As the nation’s top non-agency mortgage lender, Angel Oak has specialized for five years in delivering mortgages with attractive terms to people unable to qualify for agency loans. While our rates are a bit higher than those of agency loans, we have shown our prospects why the benefits of homeownership far outweigh the higher costs associated with them. Most importantly, within seconds, Loan Officers can show borrowers which of our seven products is most suitable by using the online Quick Quote (
Barry and I explained that consumer fear of higher interest rates is a psychological reaction not grounded in fact. After years of seeing rates in the three percent to four percent range, people assume that rates higher than seven percent will make owning a home too costly. Good Loan Officers must be able to explain that it is almost always better to buy than rent, even when interest rates are at seemingly unaffordable levels.
In today’s market, successful Originators will be those who convince their prospects that they should not exchange small interest-rate savings for a lost opportunity to acquire home equity.
Tom Hutchens is Senior Vice President of Sales and Marketing at Angel Oak Mortgage SolutionsTom Hutchens is Senior Vice President of Sales and Marketing at Angel Oak Mortgage Solutions, an Atlanta-based wholesale and correspondent lender leading the non-QM space for four years and licensed in over 35 states. Tom has been in the real estate lending business for nearly 20 years. He may be reached by phone at (855) 539-4910 or e-mail [email protected].

This article originally appeared in the April 2018 print edition of National Mortgage Professional Magazine.

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