Refinances drop when rates start rising -- but they don't go away
If rates go up this year, should I abandon any plans to originate refinances? It just seems like purchases will dominate the markets.
--Jake from New York
There is no doubt about the fact that refinances drop when rates go up. They drop, but they don't go away. What happens is the reasons people refinance will change. For example, if rates are going up because real estate is doing well, more people will have equity in their homes. That means there is the opportunity for more cash-out debt consolidation refinances. In addition, more homeowners will be looking to get out of adjustables when their rates start adjusting upwards.
Every business model should be diversified. You don't abandon purchases when you are in a refinance boom. And you don't abandon refinances when rates go up. You will have to put more effort into the purchase market, of course. Here is the good news. There is an opportunity to increase purchase business by doing refinances. Likewise, there is an opportunity to increase refinance business by doing purchases. This is called "synergistic opportunity marketing." How can we realize these opportunities which will naturally increase diversification? More on that next week.
--Dave Hershman
Dave Hershman has been the leading author and a top speaker for the industry for decades with six books authored and hundreds of articles published. His website is www.originationpro.com. If you have a reaction to this commentary or another question you would like answered in this column? Email Dave directly at [email protected].
--Jake from New York
There is no doubt about the fact that refinances drop when rates go up. They drop, but they don't go away. What happens is the reasons people refinance will change. For example, if rates are going up because real estate is doing well, more people will have equity in their homes. That means there is the opportunity for more cash-out debt consolidation refinances. In addition, more homeowners will be looking to get out of adjustables when their rates start adjusting upwards.
Every business model should be diversified. You don't abandon purchases when you are in a refinance boom. And you don't abandon refinances when rates go up. You will have to put more effort into the purchase market, of course. Here is the good news. There is an opportunity to increase purchase business by doing refinances. Likewise, there is an opportunity to increase refinance business by doing purchases. This is called "synergistic opportunity marketing." How can we realize these opportunities which will naturally increase diversification? More on that next week.
--Dave Hershman
Dave Hershman has been the leading author and a top speaker for the industry for decades with six books authored and hundreds of articles published. His website is www.originationpro.com. If you have a reaction to this commentary or another question you would like answered in this column? Email Dave directly at [email protected].
