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Is The Fed Slowing Down?
Sounds like it. In fact, Fed Chair Powell essentially said exactly that. That the December rate hike isn't a given. That's interesting because one year ago that very same Fed Chair said we could expect four such 0.25% rate hikes in 2018. True to form, we've already seen three of those and just a few weeks ago analysts and economists alike were expecting another 0.25% bump at the end of December when the final round of FOMC meetings in 2018 take place. Why the turnaround?
The Dow fell by nearly 4.0% this week. Why? Lots of reasons probably but the most glaring is the Fed statements. When the Fed backs off from an essentially promised rate increase, it tells investors the Fed is seeing something about the economy that indicates a slowdown might be coming. Further, the Fed also stated that rates are just under a "neutral" state, meaning rates aren't too low right now to overheat an economy and not too high to hamper one. That means there really is no reason to do anything right now as it relates to rates. But investors are reading that the Fed sees a slowdown on the horizon and are dumping stocks and putting more money into bonds, including mortgage bonds.
This transfer of assets is propping up bond prices and driving down yields. Another indication investors are thinking a slowdown is coming? Yield inversion. That's a technical term which means longer term bonds are providing a better return than shorter ones. More money is going into long term bonds, driving up the price which lowers rates overall. We're not completely there yet, but if and when the 10-year yield falls below the 2-year, that's when investors are convinced we're headed for some troubled economic waters.
Funny thing though, the economy is humming right along. New jobs continue to be created, Unemployment Rate holding steady at 3.7%- "full employment" most economists agree is right at 3.0%. And wage gains continue to rise at an agreeable rate. Most other economic indicators point to a healthy economy. But if enough investors convince themselves otherwise and get a little jittery about the Dow, lower rates might be forthcoming. And that's not always a good thing.
Peeling Back the Unemployment Numbers
After the Labor Department announced the Jobs Numbers for October, there were quite a few surprises. And almost a guarantee the Fed will raise rates at their next round of meetings November 7-8. The last rate increase came at the September two-day FOMC meetings. Doing so would mark the fourth time the FOMC has voted to increase the Federal Funds rate. Why is another rate increase almost imminent? Let’s take a closer look at the Unemployment Numbers for October.
The headline number, the actual unemployment rate is what most analysts will first notice. The rate stayed at 3.7 percent, the same as the September figure and also the lowest since December of 1969. “Full employment” historically has been seen at 3.0 percent but in light of this new data, we could be getting closer to full employment if we’re not already there.
One bit of data that jumped out was the number of nonfarm payroll jobs which increased by 250,000. Most economics expected an increase but not anything near the 250,000 mark. The expectation was closer to 190,000, off by nearly 30%. Some information is not so obvious but still important. The number of those working hit a brand new record at 156.6 million workers. When compared to the adult population in general, this shows that 60.6 percent of the population is employed, the highest level in a decade.
But for the first time in several months, Wage Gains made some strides. The annual increase in wage gains rose by 3.1 percent, the best increase since 2009. But it’s this number that should almost guarantee a rate increase this month as well as another in early 2019.
One of the Fed’s primary concerns is to keep a lid on inflation. When things begin to cost more and buying power erodes, it’s like getting a pay cut. As an economy continues to improve, businesses can charge more for their products and services. When wage growth increases at current levels it puts more money in consumers’ wallets which can then encourage spending. More spending means greater demand for various goods and services which in turn can push companies to charge more. So far, inflation has been kept at bay and whether you give credit to the Federal Reserve or not, with the Fed’s job being to control the cost of funds and keep inflation in check, someone has to get the credit.
So, how will the next Fed move impact mortgage rates? If you have an adjustable rate mortgage tied to the Prime Rate, you’ll see an almost immediate bump. If the Fed raises the Fed Funds rate by 0.25%, the expected amount, the Prime Rate will rise by the same amount. Other mortgage rates are not tied directly to Fed moves but certainly in an indirect manner.
Fixed rates so far this year have been in a relatively tight range. Freddie Mac polls various mortgage companies across the country each week and report the average rate resulting from this poll. Freddie’s most recent poll reported the average 30 year fixed rate came in at 4.83%, a slight drop from the previous week’s average of 4.85%. One year ago, the average 30 year fixed rate came in at just under 4.00%.
It’s important to note these are averages and not what may be available today. Typically, the Freddie report is higher than what we can offer on any given business day.
When lenders set their interest rates for the day, they refer to a couple of mortgage bonds or mortgage-backed securities. For a conforming conventional loan, lenders tie their rates with to what is referred to as the FNMA 30yr 4.5 or the FHLMC 30yr 4.5 bond. And because the yield, or the rate, works in opposite of a bonds price, when the price of a bond goes up, rates go down and when bond prices go down, rates go up. Investors put more money into bonds in times of economic uncertainty as a safety net for their portfolios. When the economy points to a rose future, investors will sell bonds driving up rates.
In light the October jobs numbers we can anticipate more money being pulled from all types of bonds and securities and more into equities. Our economy is doing quite well, thank you. The other side is that we should see higher rates in the future. If you’re thinking of buying and financing a home now, we think you get the implication. For a current rate quote for your situation, call me.
Goodbye, LIBOR. Now What?
One of the most popular, if not the most popular, index for an adjustable rate mortgage is the LIBOR index. LIBOR is the acronym for the London Interbank Offered Rate. LIBOR is similar to our own Federal Funds rate. One of the most recent reports from the American Bankers Association reported there are more than $160 trillion in outstanding adjustable rate mortgages tied to LIBOR. And more being issued each and every day. But guess what? The index itself will retire in just three years. There will be no more LIBOR loans issued. Okay, so what do existing LIBOR-tied loans do when it’s time for an adjustment and there’s no index to be found?
There are other popular indexes used when consumers choose an adjustable rate mortgage or a hybrid such as the CMT, or Constant Maturity Treasury and of course the Prime rate. There’s also a new index to be introduced called the Secured Overnight Financing Rate, or SOFR, which will likely be the next introduction of adjustable rate indexes. Still, for those with LIBOR rate mortgages right now, the index is written directly into the note and the only way to change the index is to retire the existing mortgage with a sale or refinance.
I’m going to guess that lenders will offer to modify an existing LIBOR into a SOFR or other index but that’s just a guess on my part. For someone to modify an existing mortgage, typically the borrower must be in some stage of financial duress and all other options have been exhausted. In this instance, the lender would much rather modify a loan instead of take the full loss and foreclose.
Anyway, some answers should be coming soon but $160 trillion dollars is a lot of home loans with a LIBOR index tied to it.
If you’ve done your own research regarding blog copy for your mortgage website, you’re going to find information all across the map, especially as it relates to optimization. After all, your website should be out there working for you 24/7 and you do this with new blog content. But how often should you blog? Some gurus suggest 3-4 time per week while others want daily content.
Okay, so how long should each blog be? It’s a known fact that search engines won’t index anything with a word count less than 300 so that’s at least the minimum. Other SEO sites provide data suggesting that blogs and articles with a word count exceeding 2,500 is ideal. But that’s really a lot. You’d have to hire something like that out almost full time. Personally, I can crank out 3,000 words of original mortgage content in about two hours but that’s with my head down and no distractions.
But with such varying suggestions, how do you know what advice to take? Should you follow the 2,500 word route? I think that’s way too much, regardless of any scientific research. I put my money on frequency. One of the main boosting algorithms for search engines is the “freshness” date attached to the new copy. It makes sense that an article that is newer than one several months or a year old would be more relevant. In the mortgage world with changing lending guidelines, rates and programs, that makes sense.
For you however, I would start out with three per week with a word count minimum of 500 to 750 words. You can get the message out in a coherent, readable format that won’t make their eyes glaze over when they come across a 3,000 word behemoth.
Think about that for a quick second. When you stumble on an article that’s got 3,000 words, what do you do? If you’re like most, you hit the back button and do some more research. If 2,500 words gets more traffic, what’s the likelihood of them reading the article and then get motivated enough to contact you directly? Not much, if you ask me.
Content for Mortgage Loan Officer Websites
How do you know what your future clients will be typing into a search bar using Google, Yahoo or Bing? Well, you can do a trend search for keyword terms that report back what consumers are interested in. But instead of doing that, you might think about entering in some keyword searches of your own that you think prospects might be using and see the results. Ignore the ones where your site pops up because your own search cache has a lot to do with what appears on page one of the results. Instead, narrow it down to something more than “interest rates in Florida” and drill down further to “what are the best interest rates for a 30 year fixed rate loan in Destin, Florida” or wherever you want to market.
Do your own research in this manner and look at the sites that keep popping up on the top of search engine results. Look for clues to see how and why they’re where they are without paying for ads.
When you’ve paid for mortgage leads, and many of you have, you soon discover that among the leads you get, many if not most are of poor quality. You also know that the mortgage origination process is relationship driven as consumers would rather work with someone they know or at least was referred to them by someone they trust such as a family member, real estate agent or financial planner. Lead generation services are typically the second or third choice a consumer makes when they’re needing financing, having been turned down before or at a minimum they think they can’t qualify based upon their own perception of credit, income or employment.
Online lead generators make some very compelling copy when encouraging an anonymous consumer to apply for a mortgage and get multiple offers and so on. When loan officers sign up for a lead generation service they find their inbox gets rather full rather quickly. Unfortunately, the quality of the leads is generally poor and expensive. That’s why generating new leads should be the result of content for a mortgage company or a loan officer website instead of placing online ads. Why?
It’s pretty much a given these days that consumers first do research before making any major financial decision, especially getting a mortgage. Even if the query is something as innocent as checking out current interest rates, they still search on their own. And that’s where your website comes into play. Getting ranked on Page 1 of a Google, Yahoo or Bing search is the result of quality content that matches what the consumer types into a search field. The content on your website should be informative as well as objective with a final Call to Action at the end of the piece. You don’t want keyword stuffing or misleading titles or other black hat “tricks” but quality content on your loan officer website that both informs but more importantly gets someone to contact you for more information.
NMLS 20-hour Pre-Licensing and 8-hour Continuing Education Presentations- NMLS Approved
Want to become a mortgage loan officer? It’s a lucrative and worthwhile career helping people all across the country buy and finance their homes. From a single family residence to a high-rise condo, people need a mortgage. But before you take your loan officer exam, you’ll first need your 20 hours of pre-licensing education, approved by the National Mortgage Licensing System, or NMLS.
We’re an instructor for this 20-hour course done completely online. The sessions are broken into four different five hour live presentations on alternating days. If you’re ready to take the next step, contact me directly for the next round of NMLS pre-licensing webinars.
And, if you’re already licensed, you know that you need 8 hours of Continuing Education each year to keep your license active. We also have different 8 hour CE classes that you can take online without ever having to leave your home or office. Whether it’s just for you or your entire organization, we can provide the CE you need! Call us directly at 512-924-6076 or email directly at David.Reed@cdreed.com.
Wanna Be Famous?
If you have always wanted to have your name on the front of a book for sale at Barnes & Noble and other bookstores, it’s not impossible but it’s becoming more difficult. In the past a publisher would identify an industry to exploit and find an author to write a book fulfilling that niche. Where does a publisher go to find an author experienced in the niche industry the publisher wants a book? The publisher will search for authors with industry experience. These authors primarily write for trade publications. This is how I came to write 11 books about consumer finance and mortgage lending over the past 15 years. I had been writing for a real estate agent online resource with a section devoted to lending.
Over the course of nearly seven or eight years I wrote and submitted literally hundreds of articles about the lending process. A publisher out of New York City did a search for an author with my experience and they found me. Yet prior to that I was only invited to contribute to this popular real estate site because I had a working relationship with another writer who is considered by many to have been the premier author and columnist in the mortgage industry. Prior to that that same individual invited me to write regular posts in the Consumer Finance section for America Online. Prior to that I submitted posts on my own in AOLs real estate section. Prior to that I was a Contributing Editor for the trade publication Mortgage Originator Magazine. I did all of this for free. I did not charge for any article. And I did this while working as a producing loan officer.
You can see the trend. You start small and work your way up. You won’t get paid directly but you will get paid with referrals. Start locally. Contribute to a local real estate association’s website if there is a post for third party providers. You’ll need some patience but soon you’ll become the local authority. But you need to contribute not on just your own site but someone else’s such as a trade association, financial planner or accountant’s website. The problem today is it’s easy to write an article. The advent of content marketing demands you or someone on your team write and publish online. But in addition to keeping up with content marketing, find a site that will allow you to post and get noticed.
Question: To quote the great David Byrne,“How Did I Get Here?” You got here because of content. We know you’re looking for someone to write mortgage content for your website and we designed this page and others on the site to jump in front of your eyeballs. We know how it’s done and we can do it for you, too.
Mortgage website content for loan officers and mortgage companies is the number one SEO factor when getting your site to appear on Page One of Google and Bing. Period. There certainly are other things you need to do but content is number one.
Websites serve two purposes. One is to keep in contact with your current database. It’s much cheaper and more efficient to market to those who have already done business with you. It’s a “Top of Mind” marketing strategy that has been proven to work through the ages. Just be there. The second purpose is to draw in new clients. That’s accomplished mostly by writing relevant, fresh and regular content on your website.
Once someone lands on your site, you need a strong “Call to Action” to contact you directly. From there, it’s all up to you. Your site has done its job…provided a lead and you, the salesperson, takes it home.
How Do You Come Up With Titles for Mortgage Content
How do you pick out topics for your blogs? I get that question every now and then and it’s an interesting one because I write so many of them. On any given week I probably kick out 30 or so individual blogs about mortgages and home loans for my clients. Where do I get my ideas? Sometimes it’s a challenge, I’ll grant you that. There really is such a thing called writer’s block and when it hits, it hits. And when it does, I’ll go take a walk or walk my dog or maybe something as simple as just stepping away from the keyboard and step outside for bit. But in reality, I really don’t have to come up with 30 or so unique titles each and every week. I ask my clients to provide them and this helps in a couple of ways.
The obvious advantage is not having to come up with brand new titles on my own. I’ve certainly written about most every aspect of mortgage lending from a loan officer’s perspective as you can imagine. Being provided titles up front lets me tackle the topics immediately and without having to brain storm on my own. When clients provide me topics, they do so basedupon what they think their clients will appreciate. Maybe they closed a deal that was a little outside the box or there’s a new loan program that everyone needs to know about.
When writing, I keep a notepad nearby. As I write, I’ll think of a tangent topic that relates to what I’m working on. When the new topic pops up, I write down the title and continue writing. Depending upon the length of the copy, I can come up with two or three different titles. Just writing this one has given me an idea for my next article and I’m only 300 words or so into it.
After I’ve been working with a client for a few weeks or months I get a feel for what they want and what their clients are reading and at some stage I take over the topic titles for them altogether. I also have clients that send me topic ideas somewhat randomly when they run across an article they like. But yes, it is easier to write when clients tell me what to write. Doing so, sparks other ideas for material.
Get Your Page Ranked
SEO algorithms change. What used to get posts on page one of Google may not work today. Google is way on top of “spamming” and writes code that prevents manipulation of the ranking system. But how do some companies constantly appear on page one while their competitors do not? It’s not bending the rules but knowing how to write content that gets a page ranked. The first rule is the content needs to be relevant and informing. An article that provides little useful information and just appears to be posted just to get ranked, won’t work.
Getting your page ranked on page one of Google first means you need to identify a relevant topic prospects will actually read. When consumers search for a particular topic and the title of a particular piece matches exactly or nearly what is seen in the document’s title, that increases the change the consumer will click on the link and follow along to the site you want to be on. From there, the rest is up to you. Getting there is the first priority, selling them on your product or service is all up to you once they show up.
Content for Mortgage Companies
Every industry is competitive in today’s fast-moving, digital environment. Prospects don’t need to be in your neighborhood, zip code or city any longer…they can be several time zones away. For example, consider a mortgage company. Mortgage companies compete both locally and regionally and sometimes nationally. Relevant content for mortgage companies means providing valuable information the prospects will read. The problem is while a loan officer may be extremely skilled, writing compelling content for a mortgage website can be a challenge.
Hiring a Content Specialist
Consider again the mortgage loan officer, skilled in lending but not so much in writing. Large mortgage companies have staff on site that is constantly creating new content. But the smaller mortgage company or individual loan officer can hire out a content specialist. This puts the content strategy in the hands of the writer. But in the mortgage world, and other specialty industries, the writer must have a solid background in mortgage lending. The complexities of mortgage lending do not translate well to the standard copywriter.
Experience Plus Skill
The ideal writer should have a solid background in mortgage lending and an established writing professional. Granted, finding someone with mortgage experience with such writing skill can be difficult to find and most are either one or the other but not both. They’re difficult to find. Matching the skillsets of mortgage lending and putting concepts and borrowing tips into prose readers want to read often leads to disappointment. Finding someone with both lending experience and writing skills is the ideal solution.