As we near the Holidays, I am reminded of just how much of our lives revolve around seasons. Obviously, we have our physical weather patterns of spring, summer, fall and winter, but from a conceptual standpoint, seasons are defined by more than just changing meteorological or ecological patterns. In sports, your favorite team can have a winning or losing season. For die-hard fans, too much of the latter can bring several months of misery, while a winning season can ignite a fan base and inspire millions of people. For retailers, specific seasons throughout the year significantly influence demand for goods and services. The Holiday shopping season technically begins the day after Thanksgiving (even though it seems to begin earlier each year) and is accompanied by a surge in sales of electronics, clothing and many other consumer products.
The mortgage industry also has its seasons, which present changing interest rates, fluctuating borrower demand, the rise and fall of home sales and even the occasional reform of regulatory guidelines. The economy that has challenged progress for the past couple of years is recovering, but housing is still lagging. The Mortgage Bankers Association’s (MBA) Forecast Commentary released in April predicted that purchase originations would be $646 billion this year and $808 billion in 2015. In September, the estimations were lower ($569 billion and $729, respectively), but in October, the MBA asserted that “home purchase originations will increase in 2015 as the U.S. economy continues on its current path of stronger growth, job gains and declining unemployment.”
Even though it seems like have been climbing out of the same hole for several years, 2014 was a great example of how cyclical our business is. The mortgage industry is seeing progress. The number of refinances, which was increased by the historically low interest rates, began to decrease as the rates began ticking back up. Lenders across the country saw originations claim a larger share of production volumes. In fact, our purchase volume from April-September of this year realized a 49 percent increase. As a lender, being prepared for the ebb and flow of our business is crucial to long-term success. Rising purchase demand was driven even higher thanks to the spring and summer months, which is typically when home buying activity peaks. This necessitated the need for lenders to bulk up their workforce with mortgage professionals to support the new wave of business.
Sometimes, seasonal changes bring forth new considerations. Younger homebuyers are emerging in greater numbers and, although they have a different approach to homeownership than previous generations, their desire to purchase a home is strong. A study by BMO Harris Bank reported that 74 percent of 18-34 year olds plan to buy a home within the next five years, with one-third of that segment group expressing that they would like to buy within the next 12 months. This means that, in addition to satisfying the general market demand, lenders must also be aware of the younger homebuyers’ lifestyles and attitudes to properly engage them and provide the right level of service. However, a tremendous amount of talent left the industry when the bottom dropped out and we must now work to restore those positions. Recruiting younger mortgage professionals and training them on a mix of traditional processes and new technologies ensures that the next generation of homebuyers can achieve debt-free homeownership. With this very purpose in mind, we introduced the Churchill Mortgage Academy earlier this year, which provides intensive testing, training and on-the-job exposure, followed by a mentorship from a current mortgage professional. Different lenders will have different approaches, but as long as our practices evolve with our industry, we will see our efforts pay off in the long run.
Regardless of what any numbers or forecasts tell us, we should have a renewed sense of optimism for 2015. Based on where we’ve come from and where we are today, I firmly believe that the seasons are changing for the better.
About The Author
Mike Hardwick is founder and president of Churchill Mortgage, a leader in the mortgage industry providing conventional, FHA, VA and USDA residential mortgages across 33 states. For more information about Churchill Mortgage, visit www.churchillmortgage.com or follow the company on Twitter @ChurchillMtg and Facebook at www.facebook.com/churchillmortgage.