Being prepared for volatility

by 12 Jan 2017

On the January 2 episode of my Lykken on Lending podcast, we had the opportunity to interview industry expert Les Park on his projections for the mortgage industry in 2017. While there are many different moving pieces in the state of the industry, according to Les there is one thing we can be confident about — 2017 will be a year of extreme volatility for the mortgage business.

The incoming administration is likely to be more pro-business than the previous one, and many organizations are counting on the slackening of regulation to help them in their growth. While this may be true, I think there is danger in relying too heavily on this expectation. As much as we can hope for regulations to become fairer for the industry, we've still got to remain prepared for the ups and downs. As the saying goes, “Hope for the best, but plan for the worst.”

Some leaders in our industry may become overly optimistic and therefore neglect to do contingency planning. Due to how volatile the industry is likely to be in 2017, the failure to plan can be catastrophic. It doesn't matter how convinced we are that things are going to improve, we should always have a buffer. We should always have a plan B. Inevitably, there will be ups and downs. That's the nature of the market. If we haven't appropriately hedged our bets during one of the “downs,” though, we might not be able to ride the wave back up.

So, my advice. Stay positive — but stay disciplined. Don't put all of your eggs in one basket and be ready for anything that comes. In 2017 especially, be prepared for volatility — because it is almost certainly coming.

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