By David Lykken
Special to MPA
For the loan originator, the purchase application is everything. The number of purchase applications, and the rate at which these numbers grow, is the gold standard for the health of the mortgage industry. Why is this the case? Yes, of course, each purchase application is another opportunity for a closed loan. But, did you ever think about what a purchase application signals? A purchase application is a message from the prospective home buyer that he or she is interested in owning a home.
While many other variables factor into whether or not a loan can be closed, the application itself is a testament to the intentions of the person applying for it. When we receive more purchase applications, in other words, that means there are more people interested in owning homes. Whether or not people actually can become home owners, wanting to become homeowners is a great place to start. This is especially true in light of the stories we've heard about the indifference millennials are beginning to have toward home ownership.
So, what can we expect from purchase applications in 2015? Well, lately the number of purchase applications have been at historic lows. In 2015, it appears that we'll start to see an increase simply because we may have hit the bottom. We can only go so low before we start to see some growth. Going into the future, the growth is likely to be slow but, as we see the economy improve, we should also begin to see the number of purchase applications (and the desire for people to own homes) improve as well.
David Lykken is 40-year industry veteran who has been an owner operator of three mortgage banking companies and a software company. As co-founder and Managing Partner of Mortgage Banking Solutions, David consults on virtually all aspects of mortgage banking with special emphasis executive leadership development, corporate strategic direction and implementation as well as mergers & acquisitions. A regular contributor on CNBC and Fox Business News, David also 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. Recently he started producing a 1-minute video called “Today’s Mortgage Minute” that appears on hundreds of television, radio and newspaper websites daily across America.