Future of Mortgage Lending
A Market Discussion
RateLink opened its doors in May 1994 with a mission to provide mortgage professionals with timely and accurate data as a means to a competitive advantage. While our customer base and product offerings have grown considerably since our early days, we still maintain our founding commitment to customer satisfaction and the delivery of quality data at a fair price.
Eric Holloman is the President and founder of RateLink. Prior to creating RateLink, Eric worked for many years in Secondary Marketing for a major National Mortgage Corporation in which he ran the mandatory and best efforts commitment desks, set daily pricing, securitized and sold bonds, and negotiated with Fannie Mae and Freddie Mac. Eric used the knowledge obtained from his Secondary Marketing years to create an industry first market reporting system that takes complex pricing calculations and conveys them to mortgage professionals in a quick, clear, and concise method that many have since tried to imitate. 10,000+ clients use the RateLink service each year.
Our philosophy on the markets
We don’t hire psychics. No one knows what interest rates are going to do next week. If they did, they would trade bonds from their private island. If you see someone suggesting they know, watch out. All the pretty charts and economic analysis in the world can’t predict the future of rates.
The goal is to increase income and minimize anxiety. Let’s be clear, there is a distinct difference between gambling and taking calculated risks. If you are inclined to gamble, we suggest you visit Las Vegas. At least the casino serves you free drinks when you are at the gaming tables. If you are gambling at your desk, you have to provide the refreshments.
Gambling is closing your eyes and hoping for the best. On the other hand, taking calculated risks can increase your income and reduce your anxiety. In order to make good decisions you need good information, which is exactly what RateLink provides.
Timing is one of the most important factors in success. Unfortunately, knowing the perfect time to lock in a loan is impossible until after the fact. However, there is a guiding principle that can help everyone make the best decision.
Our philosophy is to keep your pipeline covered. When a borrower’s loan is floating, there is a 67% chance that the outcome will not be desirable.
The prudent person locks in when the numbers are acceptable to everyone involved in the transaction. There are three things that can happen following the lock: rates can fall, rates can stay the same, and rates can rise. If rates fall, everybody loses. If rates stay the same, everybody wins. If rates rise, everybody wins. Two of the three possible outcomes are positive.
Let’s look at the same situation without locking. If rates fall, everybody wins. If rates rise, everybody loses. If rates stay the same, everybody loses because they wasted time, energy, sleep, and other valuable resources worrying about what interest rates were going to do.
There are three pieces of the puzzle that must be analyzed in order to make good float lock decisions.
- You must have access to mortgage backed security information.
- You must know what the mortgage backed securities have done since pricing was set.
- You must know what economic news or world events are coming out the following day that could cause the bond market to react
RateLink provides you the tools necessary to make prudent decisions. Using the RateLink service will increase your income and reduce anxiety.