Trillions, Fatigue, and You.

Trillions, bazilians googleplex, infinity, gagillion. Remember as a kid all the big words we would use to describe the biggest numbers we could think of. When looking at the demand situation in our industry right now, it feels like a few bazillion.

In America today, there are about $11.5 trillion in outstanding mortgages. Since the pandemic hit in March we have probably refinanced about $1-ish trillion total (annualized run rate at $3 trillion/yr). That means we only have another $10.5 trillion in loans that have not been touched. Yes, it feels like we just refinanced the whole world….no, we did not.

In the year 2018, the entire mortgage industry produced $2.39 trillion….TOTAL (I haven’t seen the 2019 #s, but likely around $2.5). My apologies go out to all the processors who are already working 24/7.

OH, and every year we add about $1.5 trillion in new purchase loans.

AND, combine this with massive demographic/lifestyle shifts which will fuel the purchase market for years.

YEP, one more thing, lol. With property values rising in many areas, additional untapped equity is opening up. Check out this stat:

• "Tappable equity rose by 8% year-over-year in the first quarter of 2020 to a record high of $6.5 trillion," said Graboske. "What's more, with mortgage interest rates hitting record lows, 90% of homeowners with tappable equity now have first lien rates above the prevailing market average.Jul 6, 2020.(Ref: Black Knight)

WOW. OPPORTUNITY is everywhere. Our ‘New Normal’.

…….quick side note, the term ‘New Normal’ was coined by Mohamed El-Erian. He is Chief Economic Adviser at Allianz. Formerly at the legendary bond company PIMCO, with the well-known investor Bill Gross (The Bond King). In my opinion, Mohamed El Erian is without doubt one of the great economic visionaries of our time. When he speaks, I listen.

My advice for Loan Officers

Fatigue is real. We all need to pause and re-balance.

You are allowed to relax, briefly, and get your game plan together. This is not a normal refinance wave that lasts three months. You are likely looking at about 2-3 years of more demand than any of us can possibly handle. Couple thoughts:

• Get a new game plan together for this new environment. I realize when this started we were all caught a bit off guard. Everything has changed and it is not going back to the way it was. That ship has sailed. Our ‘new normal’ is here. If it means having one of those little mini retreats with yourself or company, do it. Sounds fun actually ??
• Re-prioritize work tasks. We can't work 80 hour weeks forever. So we need to start prioritizing what's effective, and what's wasting time. We need to re-balance work with our personal lives and families. Immediately.
• If you love pain and misery keep marketing for rate and term refinances. Seriously, this is like the Retail monster wheelhouse. You’ve been warned ??
• Referral relationships are everywhere, you hear me say this over and over, but this will absolutely be your future…….if you make it.
• Get a new game plan for purchase loans and relationships. ‘To be determined’ underwriting, online relationships, e-closings, video meetings, etc. Make sure you have all your bases covered, and make sure you understand what products are still available. Take some training classes, if you need advice on where, email me.
• The cash-out opportunity is nothing short of ridiculous. The quote above tells the whole story, and values are continuing to rise significantly in certain areas.

Our new normal. Trillions. Fatigue.

Thanks for reading, please feel free to share ??

Warmest regards,

Rich Phillips

Almost at $3 billion in career funded volume! Named one of America’s top 100 Wholesale AEs by the Scotsman Guide.

To see some of my archived articles please visit me at www.dhirubhai.net/in/richphillipsAE

Senior Account Executive. Wholesale/Correspondent Lending.