#2951: Westerra's Michelle Burke Breaks Down Today's Mortgage Lending Landscape...

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Be sure to watch the entire episode below the show notes.

Westerra Credit Union’s Vice President of Mortgage Lending Michelle Burke stopped by the show to share her experience and insights on breaking down the mortgage lending landscape -- as well as providing key insights for credit union members, home buyers, and home sellers.

First, she talked about how people should prepare for home shopping and buying in a competitive market:

• There is a need for more inventory on the market, as a highly competitive sellers’ market continues to trend. A low housing inventory is caused by an increase in demand for houses without the supply to meet it. 
• Until inventory increases significantly, sellers will still have the upper hand. However, it does seem to be turning and the appraisal gap coverage and waiving inspections or repairs has slowed. The offers are often still over asking price but we are not seeing the $100k - $300k over list anymore. The average offer to list price last month was 103.7%

First and foremost, Michelle adds that members should consult with a Mortgage Loan Officer and get pre-approved before making any moves.  The monthly payment for a $500,000 loan is $775+/- more than it was at the end of 2021.  Or putting it in a different lens -- reduced buying power by $140k.

Once armed with a price range, she talked about how homebuyers should make a game plan before falling in love with their dream home, including making the following decisions in advance. This will help their realtor when representing an offer to ensure the financial plan is being followed:

• Are you willing and have the ability to cover any appraisal gap? This comes out of pocket in addition to any normal down payment and closing costs.
• How much are you willing to accept as deficiencies from the property inspections? 
• Can you give the seller up to 60 days of post-closing occupancy at no cost?

She explained why credit unions have a competitive advantage: 

• Many credit unions have a more personal touch. 
• Credit unions are member owned, you are a part of their community, making the experience that much more customized. 
• Check with your local credit union about their unique programs and offerings. More than likely they’ll have ideas to give you a competitive edge. Choosing a credit union is a big piece to consider when beginning the process to ensure a less stressful process and a positive outcome.
• Credit union Mortgage Loan Officers share a deep suite of offerings and there is likely a product to fit your unique situation (think…FHA, VA, and several unique portfolio products in addition to the standard conventional loans)

Michelle addressed today’s volatile rate situation:

• The Federal Reserve Board has made significant rate increases YTD and will continue to do so to temper U.S. inflation. While the Fed rate does not tie directly to first mortgages like it does some other lending, it does have impact other rates which has led to further increase in mortgage rates. 
• As many may have seen, rates have already increased well above the level economists were predicting. 30 year Fixed Mortgage rates are currently hovering just under 6% but did reach 6.5% mid-June while the Fed rate increased by .75%.  
• Until inflation is in check, economist are predicting that the Fed will continue to increase rates, put us into a recession, which will impact the mortgage market. 
• Both the stock market and mortgage rates tend to fall when the economy is faltering, and increase when it’s doing well. The stock market is seeing some correction from the Feds actions but time will tell if this is a small blip or it will continue to fall.  
• There are so many factors at play that will influence how the pending recession turns out.  We make decisions based on the best information we have at the time…making educated guesses on the outcome.

Lastly, she shared the bottom line when it comes to today's mortgage lending landscape:
Stay educated, be nimble and make sure you have established a team that is equipped to help prepare you for your home-buying experience in advance, throughout the buying or selling journey, and beyond.

Check it out and let us know your thoughts. And be sure to watch the entire interview below for all the details.