Do you ever stop to think about how the interest rate hikes have impacted lenders? Though prices are holding pretty steady in Hawaii, sales volume is down. A lot. Unfortunately, the fall off in volume hits lenders hard.
Recently, I reached out to Meena Na, Branch Manager of Element Mortgage Hawaii. I asked her about the impact of higher interest rates on her business. For those of us in the real estate profession, it’s great to hear the perspectives of various professionals in our industry. We can learn a lot from others. Sharing our experiences provides us with a greater depth of understanding and market insight. It ultimately helps us to serve you better, too.
To gain a better appreciation of the major shift lenders have had to make in today’s market, it will help to learn a bit about their experience during the pandemic first.
When I asked Meena about her experience during the pandemic, she best described it as a feeding frenzy. Suffice it to say that lenders were busy! It’s no secret that mortgage interest rates hit historic lows during the pandemic. Homeowners were refinancing and buyers were buying. Mortgage volume hit a historical all-time high. It was very demanding for lenders and work days were long. Very long. Meena shared that she worked from 8 a.m. to 6 p.m. each day (weekends were no exception), and then again from 9 p.m. until the wee hours of the morning. There were simply not enough hours in the day to service all the borrowers. The crazy demands no doubt took their toll on lenders, but clearly, it was also a productive and fruitful season.
How Has the Market Shifted?
But, what about now? How are things post pandemic? Meena did not mince words. Bottom line: “Mortgage professionals are still getting over the shell shock of how quickly the market flipped.” Rapidly rising interest rates have plagued the housing market since the Spring of 2022 and the pace in which the rate hikes have occurred is being felt. Big time. Meena mentioned that it just feels so much worse because we all remember the 2.5% interest rate as if it was yesterday. So true. It’s especially challenging in Hawaii because our price points are high, inventory is still low, and for the most part, it is still a Seller’s market. Hmmm…..this market definitely is challenging for mortgage professionals.
Current Challenges
Speaking of challenges, the following are just a few of the current challenges Meena shared with us:
- Significant contraction in buyer pool and an overwhelmingly large number of mortgage professionals still in the industry competing for the same small slice of the pie.
- Loss of refinance volume. For many mortgage originators, refinances made up 100% of their business during 2020 and 2021.
- Overcoming objections from buyers around the timing and uncertainty of the current market and helping buyers understand the advantages of purchasing a home, even in today’s market.
Meena is a seasoned professional and she understands that the market is cyclical. This isn’t a short-term job for her. It’s her career and she is savvy and experienced enough to know that cycles come to an end and the dust eventually settles. Of course, for new loan officers who have yet to experience such a shift, it is hard. Very hard.
Advice for Buyers
Loan officers aren’t the only ones challenged in this market. It’s also tough for buyers, but Meena left us with some encouraging final thoughts:
- It is NOT a bad time to buy. Sellers are more flexible. That flexibility may show up in price, seller credits, willingness to work with contingent offers, or longer timelines.
- If you find the home you and your family have been looking for and you’re able to manage the payment, it’s absolutely still a great investment.
- A home purchase is often the largest investment an individual will make. Take a moment, look at your finances, and see where you can trim and take the leap!
Meena also mentioned that for Sellers, Hawaii’s market is and will always remain one of the strongest housing markets in the nation. Lack of inventory and high demand for housing is on your side. We don’t know where we’ll be in the next 12 months, but if you’re on the fence about selling, get off and get after it!
It’s great to know and work with professionals like Meena Ma and her team at Element Mortgage. In Meena’s own words, “It is during this time that it’s critical for buyers to seek out true professionals who are able to help them navigate the market.” I couldn’t agree more!
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