“I don’t think anybody believes that the 2% to 3% rate is coming back anytime soon or ever,” he said. “I think there is hope that the low 5s might come back, but the further we get away from that COVID rate and the more comfortable we get with a pretty resilient economy, if we’re lucky, low-6, mid-5 is going to be where we build our business around for the foreseeable future.”
He said the affordability problems borrowers are facing are real, but they are not primarily a mortgage rate problem. Insurance costs and rising taxes are the forces squeezing household budgets in ways that a half-point rate move would not fix. He tells borrowers that waiting for a rate drop might make their future home more unaffordable.
“Sitting around waiting for that big rate drop is just a missed opportunity,” he said. “At some point this thing will take off again, and houses will continue to appreciate. If that rate doesn’t drop and the house just appreciates, the affordability becomes an even bigger hurdle.”
A market at any rate
Ospina said the internal message he sends to his sales force draws on a simple historical observation.
“Rates were at 16% once, and mortgages were getting done,” he said. “And the counterpoint is, well, houses were a lot more affordable back then. But mortgages were also being done. They were being done in 2008 and 2009. Someone was still finding a way to originate a mortgage. So if they were getting done in those environments, this is a walk in the park.”
