First Quarter Mortgage Industry Update

As we reflect on first quarter, 2013 we find a real estate market which after many years appears to be gaining some stability and strength.  As a result, in many markets there seems to be more home purchase demand than supply as evidenced by lower inventory, increasing values as well as multiple contracts on properties for sale.   This a positive sign.

Looking further into the first quarter and specifically at interest rates, the markets experienced some volatility which in the opinion of this writer will continue throughout the remainder of the year.  You might remember as we entered 2013 rates were near their historic low and throughout the first quarter rates trended up.   Then toward the end of the quarter, they trended back down once again teetering on their low levels.  Mortgage volume, and in particular the amount of refinance business, directly trends these interest rate gyrations so it too dropped accordingly.  Lenders and investors both built staffing to accommodate the high volume of business in the last half of 2012 to increase capacity and controlled volume by margin management.  And when rates rise and volumes slow, adjustments are made.  And so the cycle of the business continues.  Low rates mean less origination capacity and higher profit margins.  Higher rates mean more origination capacity and lower profit margins.

During the first quarter additional industry information circulated around how the GSE’s (Government Sponsored Entities aka Fannie and Freddie) would be utilized going forward.  The main topic of conversation has been on continued increases in the G Fees (guarantee fees) associated with mortgage backed securities which not only drive higher rates to the consumer and additional income to the GSE’s, but further would make private placement mortgage backed securities more attractive to private investors (purpose is to drive more private capital into the mortgage business allowing for less industry reliance on the GSE’s).  Another area of discussion around reducing the industry’s reliance on the GSE’s is the reduction of the maximum conforming loan size eligible for purchase.  In essence, more loans to the jumbo market which seems in itself to have revived over the first quarter.   And all of this is happening at a time when the GSE’s are now reporting a return to profitability. Stay tuned as the outcome of these and many other policies will impact our industry.

In the end the changes mentioned above are good for our industry as it must change in order to become a more productive and profitable contributor to our economic recovery and expansion.  AmeriSave is well positioned to move with these changes as they occur.

Here’s to continued expansion of the real estate business and expansion of the mortgage origination business.

AmeriSave Mortgage Corporation Presents The First Annual AmeriCup Employee Putt Putt Tournament

ack in February, AmeriSave’s Executive Vice President Ed Abufaris sent an email to 7 associates from different departments and asked them to meet in the conference room where he wanted to share an idea.  Ed began, “We are a large group of people here at AmeriSave.  We are separated by departments, by floors and by the process in general.  The bottom line is that we don’t really know each other except for our close friends and departmental co-workers and it’s time that changed!”  Ed’s idea was for the team he had assembled to produce the first annual AmeriSave Putt Putt Golf Tournament; with one catch.  The tournament was going to take place during the work day AND in the office.  What?

Here’s how we began, we assigned each of our 16 functional departments a hole to design, the two largest departments were tasked with building two holes.  We sent out guidelines to each department, assigned them a space in their area for their hole and gave them suggestions on items they could use to build their hole.  We encouraged them to use items from around the office, like reams of paper, file boxes, folders, plants, etc.  A big thanks to our friends at Porsche Cars North America, headquartered near us in Atlanta, for sending us photos of their past tournaments to jump-start our creative engines!

We encouraged people to sign up via email to the Marketing department and had posters made promoting the event and placed them around the office.  One Friday afternoon two of our awesome marketing associates visited each department with a putter, a handful of golf balls and a hole and encouraged people to putt for prizes consisting of awesome AmeriSave marketing swag.  With a sign up sheet in hand, this really drove registration and by the end of the day we had 140 participants!  We assigned teams of four golfers, making sure that all four players represented different departments.

As the date of the tournament neared, we promoted the prizes and contests.  The prizes to be awarded were:

–        Individual Tournament Champion with the Lowest Score ($100 gift card)

–        Tournament Champion Team – (awarded a gift card for a team lunch)

–        Most Challenging Hole Design (awarded a departmental lunch)

–        Most Creative Hole Design (awarded a departmental lunch)

–        Team Trivia Winners – (awarded $25 movie gift cards)

–        Best Costume ($25 gift cards)

The week before the tournament the lobby was cleared out and the Executive team’s completed hole was setup to encourage other departments to finish theirs up (or in some cases, start on them!)  A team registration list was posted in the lobby assigning tee-off hole and tee time every 15 minutes.  Team members email addresses were posted and they were encouraged to introduce themselves to each other before the day of the tournament.

The morning of the tournament the office was alive with the AmeriCup spirit, everyone was working together to finish setting up their holes before the 9am tee time.  As the teams met in the lobby to have their team photo taken and head off to their first hole, it was truly great to see so many people who have worked under the same roof for many years introducing themselves to someone for the first time.  We heard countless phrases like, “We email back and forth all the time, it’s great to finally meet you!” and “We’re always leaving the building at the same time, I never knew you worked at AmeriSave also.”

The creativity of our associates really came out in the designs of their holes.  Our Sales team had the longest green in the office at almost 30 feet and included water, sand and wind hazards.  Post Closing built an awesome Las Vegas themed hole complete with a real house of cards.  The AmeriSave IT department stuck to what they know, building their hole out of old servers and network cable.  Quality Control/Customer Service (who incidentally won the award for Most Creative) reconstructed buildings on our block of Atlanta’s famous Peachtree Road out of cardboard and you had to putt your way through the buildings.  For the team trivia, two types of photos were posted on the walls.  We posted scenes from well-known movies with the main character digitally removed from the scene and, being a mortgage lender, we posted photos of homes that were prominently featured in movies and the teams had to name the movies.  At the 18th hole, the teams turned in their scorecard and went back to their desks, having hopefully made a couple new friends.

At the end of the day, all employees were treated to a cookout in the courtyard with an assortment of food brought in by The Varsity, an Atlanta institution.  The prizes were awarded and everyone enjoyed the company of co-workers and friends, both old and new.  Employees raved about the day and insisted that this become an annual tournament.  We think it will be!

The two goals of the event were to encourage departments to work together towards a common goal and to foster relationships between employees of different departments.  The end result of both of these goals being better internal communication which will allow AmeriSave to better serve the needs of our borrowers, which is the real reason we’re here.

 

The Battle Of Homeownership Vs. Renting

With today’s mortgage rates still very low, the cost of homeownership may rival that of renting in many markets.  Real estate blog Trulia states, despite asking price increases of 7% outpacing rental increases of 3.2%, the gap between buying and renting has narrowed only slightly.  Today, it is still 44% cheaper to buy a home versus renting in the 100 largest metro areas in the United States.

The top ten markets where buying is significantly less than renting are:

10. Indianapolis, IN – 58%

9. Birmingham, AL – 59%

8. Kansas City, MO – 60%

7. Memphis, TN – 62%

6. Toledo, OH – 62%

5. Warren, MI – 63%

4. Cleveland, OH – 63%

3. Gary, IN – 63%

2. Dayton, OH – 63%

1. Detroit, MI – 70%

Mortgage rates, tax deductions and the length of time you plan to stay in the home are the three factors that have the largest impact on the rent vs. own argument.

– With today’s average mortgage rate at 3.5%, buying is 44% cheaper.  But if mortgage rates were to rise, to say 4.5% it would only be 39% cheaper.

– Most taxpayers who are homeowners file an itemized tax return and mortgage interest and property tax payments are typically deductible.  If you itemize at the 25% tax bracket, buying is 44% cheaper.

– It’s a no-brainer that the longer you stay in the home, the more cost effective it is.  Spreading out the costs of buying and selling a home (closing costs, improvements, realtor commissions) over a number of years is will save you the most money.

Use this calculator to determine whether owning or renting is better for you.