Better times emerging after a difficult period
Across the mortgage industry, there’s finally hope on the horizon for an active spring homebuying season.
Last week’s news of inflation dropping to 5% – its lowest level since May 2021 – has buoyed the sector given the expected after-effect of lowered mortgage rates by summer. Already, the development is having the desired effect with brokers seeing an uptick in mortgage applications after an extended dry spell after last year’s downturn.
Amid the cacophony, Darius James, president and CEO of Huntsville, Ala.-based Porch Point Mortgage, was palpably enthusiastic as he took a break from remodeling a new headquarters building slated to open by early summer. He was energized by the likelihood of mortgage rates dropping below 6% after the recent Consumer Price Index (CPI) report from the US Bureau of Labor Statistics revealing lowered inflation.
“It’s the beginning of the purchase season, but you’re starting to see the market pick up right now,” he told Mortgage Professional America during a telephone interview. “From our standpoint as a company right now, we’re having more people and more locks than we even had this time last year. The market is picking up quite a bit.”
Brokers poised for lower mortgage rates
That CPI report is just the icing on the cake, he suggested, as inflation has been steadily dropping after nine consecutive interest rate hikes by the central bank had the desired effect of tamping down inflation..
As a member of the Association of Independent Mortgage Experts (AIME) – for which he’s often featured on panel discussions during the trade group’s conferences – James is in constant contact with colleagues across the country who have reported similar upticks in mortgage activity. He noted the uniqueness of his market – where some 5,000 people are moving to monthly given the presence of major employers such as the US Army Redstone Arsenal, Huntsville Hospital Health Care, NASA Marshall Space Flight Center, Boeing Co. and others – helps to bolster his company’s bottom line, given a ready audience for his services.
“It’s a really hopping market,” he said of his home base, “but I’m also seeing that with other brokers across the country,” he said. “They’re busy right now.”
Lenders move to capitalize as market improves
It’s not just lowered inflation that’s helping the industry emerge from its doldrums: “Mortgage applications are picking up, but you also see lenders like UWM coming out with the 1% Down,” James said.
Indeed, United Wholesale Mortgage (UWM) last week unveiled its Conventional 1% Down product that will enable homebuyers to purchase a home with a down payment of just 1%. “We are bringing back the Conventional 1% Down to give independent mortgage brokers a competitive edge with borrowers and real estate agents, while also helping make homeownership more affordable and accessible for borrowers across the country,” Mat Ishbia, president and CEO of UWM, said in a statement. “We’re going to continue developing products and solutions that will help get more borrowers into homes faster, easier and cheaper and Conventional 1% Down is a great example of how we’re doing that.”
Ishbia described the goal of the product to allow more homebuyers to reach their minimum down payment faster and easier, with UWM providing the additional funds for borrowers to achieve 3% equity on day one. The limited offer is available for homebuyers who have an income at or below 50% of the area median income and a 97% LTV (loan-to-value).
“Particularly in the wholesale channel when markets track like they have been, this is when our channel can flourish and grow,” James said. “That’s why you’re seeing – they call it the ‘great migration’ to the broker channel – so many retail loan officers move over to the broker space.”
James seems to have that “flourish and grow” part down. After speaking to MPA, he resumed prepping the new headquarters – with 2,500-plus square feet of office space and another 3,000 square feet reserved for community events focused on financial literacy and mortgages – to be opened by his firm’s second anniversary in June. Clearly, there will be ample space to accommodate those bolstered mortgage applications come summer.
Want to make your inbox flourish with mortgage-focused news content? Get exclusive interviews, breaking news, industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
