By Megan Anderson, Vice President of Public Relations
With mortgage rates on the rise, tight inventory and the media talking about a declining economy, it can become easy to find ourselves complaining and wishing we could go back to the “good old days.” The thing about complaining, though, is that it doesn't get us very far. Complaining keeps our minds focused on problems instead of finding solutions. It keeps us stuck in negativity instead of finding the positive.
Since this month is all about celebrating freedom, I thought we would focus on freeing ourselves from the toxic limiting mindset of complaining so we can focus our efforts on seeing the opportunities that lie ahead. To do so, we will look to data from history and key resources that can help you prepare for our current market – and the one to come.
Success Is a Decision
While volume has slowed down, let’s use history to gain some perspective. The chart below shows origination volume dating back to 2010, with the Mortgage Bankers Association’s forecast for 2022 highlighted in orange. If they are correct and the total volume for 2022 comes in at $2.6 trillion, that would make this the third-best year in the past 16 years.
This is a great reminder that success is a decision we can make regardless of market outlook.
Rates Are Still at Historic Lows
The sharp rise in rates has caused some heartburn among prospective buyers and drastically reduced refinance volume. Once again, history can give us some perspective. In the 1970s, rates started out in the mid-7% range and climbed to over 11% by 1979. As we entered the 1980s, it became more expensive to borrow with mortgage rates hitting a high of 18% and averaging 10% for the decade. Then in the 1990s, mortgage rates started higher but ended in the 5.5% range.
Today with Jerome Powell as our Fed chair, rates have climbed, starting off in the 2% range to mid-5%.
You can’t pick up a newspaper or turn on the TV without hearing about economic turmoil. In fact, many economists are predicting we enter a recession. The MBS Highway team believes this to be true.
History has shown that every time the Fed fights inflation by raising the Fed Funds Rate, we have entered a recession. Yet, one positive aspect of recession is that mortgage rates tend to decline. Knowing this means we can prepare our business for this future opportunity.
Building Referral Relationships
Many realtors are struggling in today’s housing market. Inventory is tight and competition is high. This gives you an opportunity to build strong relationships.
According to the Case-Shiller Home Price index, homes appreciated by 20.6% year over year in March, leaving many clients wondering what their home is worth.
MBS Highway has a wonderful tool called MBSe$timate or AVM that can help your realtor partners answer this question, saving them time and potentially landing new listings. This tool shows clients the estimated value of their home and surrounding comps, along with other stats like median sales prices and cost per square foot. The best part about this tool is that it keeps clients in your own ecosphere, unlike other public sources of this information where clients can potentially be poached.
This is just one of the many tools that can help you build better relationships with your referral partners. If you want to learn more about what tools can help you build stronger referral relationships, join one of our referral partner webinars. And feel free to invite your referral partners as well!
Building Client Relationships
Understanding today’s market conditions and where we could be in the future can help us build relationships with our current and future clients. For example, if you have clients who need some extra cash but are hesitant to do a cash-out refi due to the rise in mortgage rates, you can help alleviate their fears by educating them that rates should go down in the future based on what has happened during past recessionary periods.
This gives you an opportunity to help them get the cash they need today with a refinance to a lower rate in the future. MBS Highway’s Debt Consolidation tool can help show your clients the power of refinancing and consolidating their debts.
For potential buyers who are hesitant to move forward with purchasing a home due to fears of rising inflation, a declining economy, and higher mortgage rates, it’s important to show them how purchasing a home can help them in hedging inflation and building wealth through real estate. MBS Highway’s Buy vs Rent tool can show them the true benefit of buying and how much rents are estimated to continue to increase in their area. You can use this tool to demonstrate how their monthly payment remains the same with a fixed rate mortgage, no matter what happens with inflation.
More Opportunities to Come
It is important to remember that once we do enter a recession, rates will indeed come down. This presents a wonderful opportunity for you. All the purchase transactions you are doing today will become your refinance opportunities in the future. It’s crucial that you continue to build these relationships so that when rates do come down, you are the one who wins that refinance business.
Here are a few ways to stay top of mind so that clients think of you when that time arises.
Follow your clients on social media. Social media is like a free CRM system. Posting consistently increases your chances that your posts show up on others' feeds, which is a great way to maintain regular touch points with your clients. If you need help with social content, try using MBS Highway’s done for you social graphics and Social Studio tool. The video scripts and a teleprompter tool make it extremely easy to create video content that positions you as a trusted advisor.
Engage with clients on social media. If you want clients to see your posts, make sure you are engaging with their content. This will also make the conversation easier when you call them about refinancing, because you can mention important milestones they experienced. Create a simple Excel document with your clients’ names and a link to their social media page. A few times each month, you can simply click on the link and like and comment on a few of their posts.
Start a newsletter. Coming from a millennial, I do not believe email is dead. I love newsletters and have a handful I read religiously. Newsletters are a great way to add another consistent touch point with clients. If you need content, MBS Highway offers a weekly newsletter you can download and send as is, or take bits and pieces to add to your own content. Another perk of writing your own newsletter is that writing the content can help your own understanding of it. This allows you to speak to clients from a place of authority and confidence, which increases your chances of conversion.
The Decision is Yours
I hope that this article has given you a new perspective regarding the opportunities that lie ahead. And if you are worried about today’s market, I want you to pause, take a breath and write down the things you are grateful for. Write down why you do what you do and the opportunities still to come. Remember: Success is a decision that no one else can make for you.
As always, the team and I at MBS Highway are here to help. Take advantage of our free 14-day trial and try all the tools MBS Highway has created to help you and your clients succeed!