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Residential Department: From the Editor: August 2018


From the Editor

Rising interest rate jitters can be overcome

r_2018-08_FTEFor the mortgage industry, the 1980s remain a cautionary tale, a story to tell around the campfire to scare kids at night.

Sure, interest rates are climbing today and maybe — gulp — they could get above 5 percent again. But remember the 1980s? That’s when interest rates shot to 18 percent for a 30-year fixed-rate mortgage. Imagine convincing a homebuyer to take a dive in that water. That’s why economists and industry veterans alike point to rising interest rates today and repeat the refrain that, historically, rates remain low.

This is true, but it’s also not the entire story. Both Freddie Mac and Fannie Mae keep a historical record on their websites showing interest rates going back to the 1970s. Interest rates did jump higher than 18 percent for a couple of months in 1981 as the Federal Reserve combated double-digit inflation.

Rates for a 30-year fixed-rate mortgage averaged more than 10 percent in every year throughout the 1980s, although rates dipped into single digits for several months toward the end of the decade. So yes, homebuyers should be thankful that they’re getting a loan today and not in October 1981. Here what’s wrong with that picture, however.

Many homebuyers won’t look at it that way. They won’t look to 30-plus years ago. They’ll remember 2012, when a 30-year fixed-rate mortgage could be had for 3.35 percent. A neighbor received that rate or maybe a family member, or maybe even they received it. As interest rates inch higher, homebuyers will look to the recent past for comparison.

If interest rates continue to climb, clients will likely respond with wariness and hesitancy. For mortgage originators, the job becomes just that much harder. This is where skill and talent come in to play.

It’s an idea brought up several times in articles in this month’s Scotsman Guide Residential Edition, which focuses on training and career development. Dennis Black of Dennis Black and Associates makes the case that skill matters in a day of rising interest rates. Read on Page 126 about how the interest rate should be the last part of the discussion with your client.

On Page 98, Nathan Rufty of Mortgage Marketing Pros discusses how some originators fret about rates while the best of them adopt a true professional mindset in the face of any adversity. On another front, Dick Lepre of RPM Mortgage explores the idea of just how much power the Federal Reserve holds in moving the needle on mortgage rates on Page 120.

In this month’s lead article on Page 39, Guild Mortgage’s Carolyn Frank writes about the challenge of attracting top-flight talent. She notes that the mortgage industry has a noble mission — putting families in homes — and asks why younger job-seekers aren’t flocking to the industry. On Page 67, Angela Pisciotta-Perez of Mountain West Financial Inc. writes about the challenge of keeping the staff up to date on changing regulations and programs. She notes there’s a cornucopia of free online programs to educate your team. It just takes time and effort to find them. Siera Smith of WebMax Digital Mortgage Solutions on Page 79 describes how originators can bolster their brand with social media. It’s become the TV, newspaper, community hall and more of our times.

Enjoy these articles and more in this edition of the magazine.


Jim Davis is editor of Scotsman Guide Residential Edition. Reach him at (800) 297-6030 or

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