In September, US News reported that minutes released from the Federal Reserve’s meeting that month indicated that the Fed plans to continue raising interest rates in its attempt to curb inflation, and, in the November meeting, that held true with another increase announced.
“Several participants underlined the need to maintain a restrictive stance for as long as necessary,” the US News article stated the September minutes read, “with a couple of these participants stressing that historical experience demonstrated the danger of prematurely ending periods of tight monetary policy designed to bring down inflation.”
Sustained higher interest rates aren’t ideal for mortgage professionals, but here are a few reasons to look on the bright side.
Property Prices Are Coming Down
In addition to stabilizing the economy, rising interest rates on mortgages tend to be balanced by falling housing prices. We’ve witnessed a historic boom in real estate prices over the past two and a half years as an effect of a tightening market during 2020 COVID-19 lockdowns.
In July, average home prices came down for the first time in three years, according to analytics firm Black Knight, as CNBC reports. The decline was 0.77%, the largest decline in home prices since 2011. That’s a sign the housing market is leveling out, and demand for mortgages will remain steady.
Non-Traditional Borrowers Are Still Borrowing
With employment strong and demand for housing remaining high, we’re still seeing a high demand for mortgages from non-traditional borrowers, including:
- Self-employed borrowers.
- Immigrants.
- Foreign nationals.
These borrowers are traditionally underserved by financial institutions and have a need for lenders that understand their unique financial circumstances. If you have borrowers who are self-employed, immigrants or foreign nationals who have the means but not the documentation required to receive a conventional mortgage, Quontic’s Community Development Loans can help you serve them.
As a certified community development financial institution (CDFI), it’s our mission to expand access to mortgage loans to those underserved communities. Our alternative mortgage offerings include:
- Lite Doc: Verify income and assets without requiring tax returns or W-2s.
- Asset Utilization: Use the current balances in your bank account to qualify. No employment verification required.
- Bank Statement Program: Verify income based on the regular business deposits made to your bank account.
As a CDFI, all of our alternative mortgage programs allow the borrower to use gift funds to pay 100% of the down payment and closing costs. Borrowers may qualify with credit scores as low as 640 and a debt-to-income ratio up to 50%.
Fed rate hikes make flashy headlines and put a lot of people in a panic, but it’s not all bad news. As unemployment remains low and housing prices level out, borrower demand remains strong, and we’re here to help you continue to serve your clients.