Now is the time to act — for aged mortgage leads and the sales agents cold calling them. The latest mortgage news is that application files are up and interest rates are predicted to only go up from here. A new article in Money Magazine says it’s time for mortgage shoppers to act. I agree. Here’s what to consider.
Credit Is Still Expanding
Credit is still expanding. The Mortgage Bankers Association reported credit availability was up in December for the fourth consecutive month. The rate of credit availability is now the best it’s been since 2008. And yes, President Trump could follow through on deregulation campaign promises and send credit to even better records.
However, credit availability does not wax and wane in a vacuum. As credit becomes more widely available, more Americans eye homeownership. That means increased competition, increased interest rates, and increased home prices.
Cost of Buying a Home Is Going Up
The cost of buying a home has been climbing for a while. And it’s not looking like it’s going to stop anytime soon. Home prices themselves are part of the problem. Driven by competition, thanks to all that available credit, sellers can ask for more and get more for their home, low inventory also being a factor there. And yes, we’re now looking at home prices that are above the home price peak averages before the financial crisis in most areas. So price appreciation could slow down a bit.
However, the mortgage market has been sitting on historically low interest rates for years, and there’s plenty of room for rates to increase. And that’s what it looks like is happening. A new Black Knight report said the mortgage payment needed to buy a median-priced home went up 10% in the fourth quarter of 2016! A Berkshire Hathaway HomeServices report says more than three-quarters of homeowners and home shoppers say rising interest rates are affecting their house hunt.
Time to Lock In a Low Rate
For homebuyers and mortgage refinance shoppers, now is the best time to act. Last year, 30-year, fixed-rate mortgages dipped to around 3.4%. But the same mortgage now has a rate averaging 4.3%, and by year’s end, that rate could be half a percentage point higher. The resulting cost increase to mortgage customers could be anywhere from $50 to $100 a month.
Opportunity Is Ripe for Aged Mortgage Leads
For us agents working with aged mortgage leads, this is a good opportunity. Conditions are still comparatively good for mortgage shoppers. Credit is good, and competition is opening up for lenders.
However, shoppers may be lulled into thinking this moment is going to last forever. It won’t. Sales agents should make a point of contrasting today’s opportunity to save on a new mortgage or refinance and the future, where rates are likely to be higher, home prices are likely to be higher, and sales competition for buyers will be higher.
This is a good time to target leads that have been sitting on the sidelines, waiting to see if conditions improve. Start cold calling your aged leads today. Fill them in on the latest mortgage news and offer a solution to suit their mortgage needs. And if you don’t have enough aged leads, fill up your pipeline to take advantage of this opportunity.
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