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RCBJ Talks With Mortgage Broker/ Realtor Kevin Joyce About Rates, Pent Up Demand, Foreclosures, & More
Q. The pent-up demand for suburban housing seems to be continuing at a blistering pace even though COVID seems like it’s in the rear-view mirror. It appears the market is steamy across all price points. Is this what you are witnessing?
A: This is still a seller’s market! We continue to see more buyers than inventory across almost all the price points, but it is most competitive in the under $500,000 homes. There are variations in price points across the markets we serve, however, our agents are still experiencing multiple offers on our listings, and the highest and best rounds are basically the norm.
Q: Do you see any changes (up or down) in the number of mortgage applications or in the demographics of applicants? For example, how has the luxury market fared compared to the more median-priced homes market?
A: With the federal government indicating it plans to raise rates at least three times in 2022, we have seen an increase in mortgage applications for new purchases and for refinances. Many of our agents have reported an incredibly vibrant buyers’ market in February, with buyers hoping to lock in their rates before the first increase scheduled for March. From a pure volume perspective, we are seeing more activity in the median priced homes versus the luxury market.
Q. There’s a consensus that there will be several increases in short-term interest rates this year. Long-term interest rates remain at historic lows but have ticked up recently. Have you seen any impact on the mortgage market as far as rates going forward? Is there a rush to secure a new mortgage or refinance before the rates go up or are people starting to become wary?
A: We are seeing a rush to get into contract and get the rate locked-in prior to the indicated short-term rate hikes. Buyers and homeowners have been spoiled for the last few years with rates being at or near all-time lows. Even as we approach and surpass the 4 percent, 30-year mortgage rate, this is still an incredibly attractive rate.
Q. With the eviction and foreclosure bans lifted and mortgage relief mired in red tape, have you seen any change in the mortgage market? Has there been an increase in available properties? Are landlords for one-to-four-family homes in need of refinancing finding obstacles in the mortgage market?
A: With the release of the almost two-year long bans on evictions and foreclosures, we are anticipating the potential for an uptick in some of these events. For homeowners that have not found suitable work or been able to replace lost income, the lifting of these bans could pose a problem that could drive some homes into foreclosure territory. Historically, foreclosures take a few years to wind through the court system so the impact may not be seen until next year or the year after.
That said, with prices strong, distressed homeowners can sell their home to get out from under the mortgage issue. Some mom-and-pop owners of one-to-four-family homes have experienced a period of financial stress because tenants failed to pay full or any rent during the eviction bans. Banks have been relatively lenient, but the financial pressure could cause these small businesses to sell or refinance.
Q. Do you see a return to adjustable-rate mortgages (ARMs), and if so, what risks does that entail?
A: Adjustable-rate mortgages have been almost non-existent during the last few years. As we enter a rising mortgage rate environment, we do anticipate that ARMs may come back into favor. For the homeowner who does not intend to be in the property long-term, this can be an attractive, money-saving option.
Q. How have changes in technology affected your business? For example, do you see the continuation of desktop appraisals by Fannie Mae and Freddie Mac affecting your industry? What about non-bank and online lenders? How have they affected your business?
A: Let us face it, technology has always and will always march on. We need to adapt our business models to take advantage of technological advancements. Online applications and paperless document exchanges have decreased the workload and lowered our carbon footprint. Online lenders have always been out there and will continue to participate in the market; however, this is a very personal and deeply intrusive transaction. Many buyers still want that human touch in their dealings and that tips the odds in our favor. Desktop appraisals were common in the early days of COVID-19, however, we are seeing fewer of them these days.
Q. What is your greatest source of referrals? Is it still a hands-on, networking business, or has tech taken over the more personal aspects of your marketing? What are your greatest strengths?
A: Hands down warm referrals to our company from past clients and the community at large from both the internet as well as in-person and on social media are incredibly important.
Owning both a mortgage brokerage and a real estate brokerage offers a steady line of potential customers. The synergies between the two companies are phenomenal. My family has been in this business since the 1980s, I would say my biggest strength is my knowledge base and my ability to view the real estate and mortgage markets in a comprehensive manner.
Kevin Joyce, a licensed real estate and mortgage broker, owns QuestStar Mortgage & Joyce Realty. The company has offices in New York and New Jersey.
