The Federal Reserve made cuts to the benchmark interest rate three times at the end of last year, but the 30-year mortgage rate barely budged. And the Fed signaled that only two interest rate reductions would be planned for this year. What does that portend for the mortgage industry in 2025?
Jim Nabors, this year’s president of the National Association of Mortgage Brokers (NAMB), has an opinion about what could happen with interest rates and how consumers could repsond. He also spoke to Scotsman Guide about his organziation’s legislative priorities, his expectations for a second Trump administration and why the mortgage business holds an attraction for him.
How do you expect the mortgage market will turn out in 2025?
I don’t think we’re going to see much of a change in 2025 to the rates. They’re currently right around 7%. I’ve been in the business for a long time. They’ve always been somewhere between 6% and 8%, with the exception of in the early ‘80s when they went to 18% and then COVID when they went to 2.5% to 3.5%. What you’re going to see is a change in people’s attitude. People that are thinking that rates are going to get back to 2.5% or 3% or 4%, they’re setting unrealistic expectations.
How can people afford a home if prices and interest rates are so much higher than they were in the ‘80s and ‘90s?
People are making a lot more money than they were making. I see signs when I drive by Burger King that they’re hiring at $17 an hour. Before the pandemic, they were getting $6.75 an hour.
A lot of it is based on what area you live in. I live in a suburb of Cleveland. My house here is worth $400,000. If I put it in California, it’s a $3 million home. I have seen a small droppage in price, but for the most part, you’re not going to see a 20% or 30% drop in home prices.
What are you looking forward to in a second Trump administration?
Unfortunately, a lot of people are expecting to see immediate changes in January and that’s not going to happen. President Trump has to get his team into place, they have to try to get their policies put in place. Tax cuts could definitely help improve the ability to purchase a home.
I think people are going to get more comfortable in making those decisions they’ve been holding back on. Once people sit down and they start looking at what the actual payment (for a house is) and start realizing ‘Yeah, I can afford that.’ That’s more money than my parents paid, but you’re making more money than your parents made.
What are your concerns with a second Trump administration?
If somebody asked me today what tariffs are really going to do, I have no idea. I have one group of people telling me prices are going to get better. And I get other people telling me prices are going to go up. So, I think that that is the one economic issue that worries everybody right now.
As of December, it looks like trigger lead legislation is dead. Why is that?
On Saturday, at 4 o’clock, trigger lead legislation was alive. At 5 o’clock, it was dead. House Financial Services Chairman (Patrick) McHenry said ‘No.’ And they just said, ‘OK, well he’s the chairman.’ He’s retiring.
When Congressman (Ritchie) Torres introduced the bill that NAMB supported on trigger leads, (McHenry) endorsed it, because he himself — the chairman — had been a victim of too many people calling him because his lead had been sold. When push came to shove at the end, he killed it. On the upside, the entire industry is united on this.
What other legislative priorities should brokers focus on in the near term?
On our list besides trigger leads, we’d like the Federal Housing Administration to reconsider the (mortgage insurance premium) requirements. The idea that you’re paying mortgage insurance premiums for the life of the loan. If you have a conventional loan, it falls off at 80% or six years.
Of course, we’re concerned about flood insurance. At the same time, you’re looking at disaster insurance because of all the wildfires in the West. So, insurance is becoming a huge issue that we feel Congress needs to look at. The premium for your monthly homeowner’s insurance shouldn’t exceed your monthly mortgage payment. Nobody wants that.
Can you give me one question you’d like to have been asked and answer it?
Why do I like being in the mortgage business? Why do I like being a mortgage broker? Because I help people every day accomplish the American dream of homeownership. What’s better?
I said I’m from Cleveland. A lot of blue-collar workers here. A lot of factories. A lot of people have lost their jobs, they’re behind. When they go back [to work], they can make their payments, but they can’t catch up. And I help people keep the American dream of homeownership. When a lot of people say ‘No, there’s nothing we can do for you,’ we look for ways to help people. That’s what we do. I can’t think of anything I’d rather do in my life.
