They tell us to plan for emergencies. To have safety nets in place, exit strategies, Plan B (and C) and backup rations. While this is sound advice regardless of the situation, it is also equally as prudent to plan for – and mentally prepare for – the inevitable. At this time in our industry, an interest rate hike was that inevitable.
As we all know, the Fed raised its benchmark interest rate on Wednesday for only the second time since the Great Recession that started in 2008. As I mentioned before, this is generally a good thing and a positive sign of healthy economic growth and solid employment numbers. It may not feel that way, however, if you were hoping to purchase or refinance a home – or if your livelihood depends upon people who apply for these loans.
Rest assured, the sky is not falling. The increase to between 0.5 percent and 0.75 percent will likely cause a temporary blip in the amount of mortgage applications the industry sees. Just as any price increase typically causes a consumer to slightly pull back, re-evaluate the new cost of the item, and how much they want or need it. Potential homeowners will likely do the same. Chances are high, however, that once the new rate (and the encouraging reasons for it) sinks in, the market and loan application volume will return to normal.
Recessions, natural disasters, elections, new laws and regulations, terrorist attacks, large dips in the stock market, and domestic and global unrest are just a few of the other external forces that can affect the mortgage industry. You can probably name at least one, if not more examples of each of these events over the years that can make potential homeowners nervous. Yet the industry still stands. People still buy homes. The American Dream remains unabated, if slightly influenced from a timing perspective.
Unlike a natural disaster, terrorist attack, stock market dip or foreign conflict, this rate hike did not come out of left field and, therefore, has little chance of rocking this industry to its core. The incoming administration has lead time to adjust and prepare for any forthcoming ramifications, and we did as well.
Like anything, all good times must come to an end. If you look at how far we’ve come as an industry since 2008, I think you’ll agree mortgage banking has emerged stronger than ever. It’s an industry I’m happy and proud to be a part of, particularly within a company like Finance of America, which closely monitored the rate hike environment and has fully prepared to support its FoA family as we navigate the inevitable together.
Let me know how I can support you. Whether it’s questions, concerns, suggestions or anything in between. I’m here to make it easier for you to excel in the profession you love, and I pledge to do my very best to help you do your very best.