Not only have refinances been limited, but a new challenge has arrived for brokers. Borrowers coming through the door increasingly do not fit the profile agency lending was built around in the first place, pushing more loans into the non-agency space.
Bill Dallas (pictured top), chairman of Dallas Capital, has spent more than 40 years in the mortgage industry, including building companies through the last non-agency boom in the 1990s and 2000s. He said the mistake he sees most often among clients is treating this cycle as temporary.
“Look, you’ve been in this mess for a while, and the low-rate cavalry, you kept praying that these guys are going to show up,” Dallas told Mortgage Professional America. “I’ve tried to tell my clients that that’s not going to happen. They want to think about it as episodic. What I’m trying to get them to think about is, guys, this is structural.”
The wrong market conditions
Dallas said the current market conditions make agency lending a bad match for many customers coming in the door.
“Agency serves you really well in a purchase-driven, owner-occupied, low-rate environment, especially with employed borrowers,” he said. “We’re in a market with things they don’t do well: cash-out, HELOCs, second mortgages. They don’t want to talk about non-owner-occupied, and they don’t like self-employed.”
