Do you believe in the statistics of the lending industry? If you have been following the latest statistics, then you will know that it has been a rough year for originators. The trends are showing that less people are refinancing, which means that bankers and brokers are working hard to understand what needs to be done in order to grow their businesses.
Even though the overall originations are expected to be down this year, there is still a bright spot in the industry: Jumbo loans. But, should you make the effort to use these loans as the main portion of your portfolio?
Overview of the Jumbo Market
If you look at the trends for the Jumbo market, you will see that the trends are looking good. A statement that was released in February by the Department of Housing and Urban Development (HUD) and the U.S. Census Bureau showed that sales are increases among the houses that are priced at least $400,000 or more. The increase within a year’s period of time was a whopping 37%.
A slice of the market that is increasing even more are the homes priced between $500,000 and $749,000. In this portion of the market, the increase was 47.8% within a year. The highest priced homes (those over $750,000) had the biggest increase in sales, which was 77.7% of an increase within a period of a year.
If you are a loan originator, then you are likely seeing a large increase in demand from the private investors in the industry, especially for these high-ticket priced homes. Production is increasing, and it is estimated that $280 billion was originated in 2013 for private Jumbo loans.
Should You Change the Focus of Your Business?
Just because you see these numbers, doesn’t necessarily mean that you should make the fast decision to change your marketing business model. Instead, it is better to look at the history of Jumbo loans, and also consider the analysis for the future of these loans. Jumbo program guidelines can be quite different than some of the smaller conventional and government loans, so it is important that you understand the guidelines very well before you decide to jump in.
The overall assumption is that adding Jumbo loans to the mix of products that are available might help the originators to boost their profitability, even though the market is currently in a downturn.
Additionally, keep in mind that these loans might lead to relationships that can be used in the future. It is likely that these loans are here to stay, and other opportunities might pop up at some point. If a private-investor change happens, it will most likely be focused around Jumbo loans and sector loans, instead of other types of standard loans.
We provide current information about Jumbo loan programs to help you stay up-to-date on the changes that are occurring. Learn more by reading through the pages here on my website, DaveKevelighan.com, or you can also call me for more information at (303) 520-0004.
