National Mortgage News recently proclaimed that the mortgage refinance boom that was born during the first week of 2001 celebrated its second birthday last month. While most commercial banks have benefited from the counter-cyclical effects of the mortgage finance market, others can only pray that the equity markets return to the prominence they enjoyed in the 1990s.
The strong mortgage banking environment has benefited the U.S. economy in a variety of ways. At times, It has been the only positive indicator in an otherwise bearish economy. It permitted millions of Americans to “roll back” the cost of their long-term debt and consolidate revolving credit. Arguably, GonzoBankers who had a mortgage origination apparatus were the real winners.
Some who make a living at gazing into the future predict an American economy that will pick up steam in the latter half of 2003. They speculate that the planets have aligned themselves for the first decade of the 21st century to produce a robust economic climate at least until 2010. Imagine a Dow that breaches 25,000 or home ownership that reaches 75%.
Impossible? Maybe. The transfer of wealth to the baby boomers is estimated to be between $3 trillion and $10 trillion. The largest population of school age children in the history of the United States is right now in grades 7 through 12. Companies who gambled and invested heavily in technology will begin to receive returns on investment in the form of breakthrough productivity improvements. The African American, Latino, and Asian population will account for more than 60 percent of all new home owners during this decade, up from 25 percent at the end of the previous century.
What does any of this mean to GonzoBankers engaged in mortgage finance? Opportunity. Time will prove the sooth sayers right or wrong. But there are some strategies to consider over this decade.
1) Multicultural readiness is no longer an option. This translates to everything from welcome letters to default administration.
2) Apartment building occupancy will boom. The opportunity for small business and commercial lenders is vast.
3) The baby boomers and gen Xers can breathe a sigh of relief. There will be a population of homebuyers coming up, enabling them to unload (I mean sell) their 4,000 square foot cocoons.
4) Wealth management will flourish. But the attorneys will be the big winners. Better start schmoosing them now for referrals.
Those GonzoBankers that recognize these emerging trends and assume strategic postures early will be around to witness the second decade of the 21st century.
Guest GonzoBanker Brad Northcraft is SVP/Director – Retail Loan Services with Associated Mortgage, Stevens Point, Wisconsin.