A Personal Dilemma (Part 2) The Solution
/I shared last week about my dilemma of the disconnection between what I’m selling and what the ultimate end user is buying. I sell service, but my customer, a borrower wanting a home loan, is buying a commodity. Earlier in the year, I had one of my best referral partners make this comment to me: “Mike, you provide better coaching and communication than any loan officer in town, but your rates are killing you.” He went on to tell me about another lender, who is actually a friend of mine, “He provides great service too, but he also has the best rates in town. That is an unbeatable combination. You only offer one of the two.” That statement has been haunting me for almost six months.
Knowing that home buyers want the best deal as their number one priority, I have spent the summer talking to numerous banks and mortgage companies comparing rates and fees. I want my clients, both referral partners and the borrowers they refer, to know that when they call me, they don’t have to worry about someone else offering a better deal. I’ve been giving my clients what I want to give, which is a great service platform. Now I’m also going to give what the client wants, and that is the best deal. So after much prayer and research, I have decided to move my mortgage practice to a place that will allow me to offer both, F&M Mortgage.
It is a win-win combination for everyone and I can’t tell you how excited I am to be able to offer this!
The Week Ahead
Looking ahead, there will be a summit on Saturday between EU officials and Ukrainian officials. This may lead to additional sanctions against Russia. In the US, the important monthly Employment Report will be released on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, ISM Manufacturing will be released on Tuesday. The ADP Employment Change will come out on Wednesday. Productivity and ISM Services will be released on Thursday. Mortgage markets will be closed on Monday in observance of Labor Day.
The Week That Was
The US economic data released last week struggled to elicit a reaction in the market. Instead, investors focused on increased expectations for asset purchases by the European Central Bank (ECB). This news was favorable for US mortgage rates, which ended near the lowest levels of the year.
The ECB has a reputation for being tougher on inflation than the Fed, and monetary policy has been tighter in the euro zone than in the US. Recent comments suggest that the ECB is headed in the opposite direction, though. While an improving US economy has caused the Fed to wind down its bond purchase program, ECB officials have expressed growing support to implement an asset purchase program to counter weak euro zone economic growth. Investors have added European bonds to their portfolios ahead of this expected added demand from the ECB, pushing their yields lower. This has made global bond yields in other regions relatively more attractive, including US mortgage-backed securities (MBS). The extra demand for MBS has helped push down mortgage rates.
Recent data on the US housing market has been mixed. The Existing Home Sales report released last week showed nice improvement, while this week's New Home Sales data revealed a slight decline. The July Pending Home Sales report, which is a leading indicator of future activity, rose to 105.9, the highest level since September 2013. The National Association of Realtors (NAR), which issues the report, defines a reading of 100 as an "average level of contract activity".