Lending Perspectives: Feasting on mortgage refinance business?

Be prepared for all possible volume scenarios

The other day, I shared some thoughts with my mortgage group about how being in the business was akin to riding on a roller coaster. Sometimes it’s best enjoyed (or tolerated) by closing your eyes!

The mortgage market over the last 12 years has been a ride for sure. The financial crisis saw the benchmark 10-year Treasury bond yield drop to new lows and that started the roller coaster running at full speed. The fact I remember vividly the day that I sensed we were in for a ride (Dec. 17, 2008), along with the few slow periods for refinance volume, says a great deal about the operational challenges in keeping up with borrower demand.

COVID-19 has brought us record-low Treasury yields and mortgage rates again! During the span of a few weeks in February and March, our senior management group speculated that we certainly wouldn’t see the 10-year Treasury yield fall to 1% or less. Suddenly we were holding our breath that the yield wouldn’t fall below 0%.

When it comes to mortgage lending, there is no way we can fully prepare for all the possible volume and operational scenarios. What can your credit union do to be better prepared?


continue reading »