By David Lykken
Special to MPA
It's often all too easy to develop tunnel vision and only have concern for what's going on right in front of us. In the mortgage industry, just like any other, we tend to only focus on news that relates directly to our job, and we don't think too far out of the box.
Here's the problem: our industry is dramatically affected by the larger state of the market and the economy. Even more so than many other industries, the health of the mortgage industry is tied in with the health of the larger economy. Let's look at one example. When we're looking at our rate sheets, do we ever ask the question, "Where do rates come from?"
While rates are driven by many things, there is one key driver that has a greater influence than anything else: mortgage-backed securities. When mortgage-backed securities are traded on the open market, the rates naturally emerge from the interactions between buyers and sellers.
The closer the attention we pay to this economic activity, then, the better we will be able to understand the origin of rates and plan our futures around where we expect them to be. Of course, it is important for us to focus on our specific jobs on a day-to-day basis, but we've also got to keep our eyes open to what's going on in the market beyond our walls. If you don't keep an eye on what's going on in the larger economy, that's a sure way to get blindsided.
David Lykken is 40-year industry veteran who consults on virtually all aspects of mortgage banking. David hosts a successful weekly radio program called “Lykken On Lending” (www.LykkenOnLending.com) that is heard each Monday at noon (Central Standard Time) by thousands of mortgage professionals.