Any Press is Good Press

Turn your TV on tomorrow morning.

If I had to choose whether or not to bet $20 in my office NCAA basketball pool, or bet that same amount of money that one of the lead news stories tomorrow would be “Fed Cuts Rates!”, I would take the latter all day long.  That is the easy money.  The Fed is reportedly going to cut the Fed Funds Rate tomorrow by up to .75%.  What does that mean for you?  That means that lead service providers will be flooded with inquiries tomorrow, and for those of you in the retail mortgage business, you can expect a few walk-in appointments.  As they say in Hollywood, “any press is good press.”

The same is true of our industry.  Any time that our Fed Chairman Ben Bernake speaks, people listen.  Most people have no idea that these overnight cuts can actually lead to higher mortgage rates, and guess what?  They don’t care.  It isn’t our job to explain the phenomenon of how cutting short-term interst rates typically exacerbates inflation which leads to higher mortgage rates down-the-line.  People aren’t calling you to hear an Economics Seminar.  They are calling because they have a 6.375% 5-year Adjustable and few credit cards that they have to pay off after their daughters Sweet 16 Party and a wine-tasting trip to Napa turned into renewing vows and a new Lexus SUV.  Don’t unload all your negativity on them and talk about short-term versus long-term and how the rates were actually lower on Monday.  Try this: tell them, “yes, rates are down.  Now is a great time to refinance.”  Why would I say that?  Truthfully, IT IS A GREAT TIME TO REFINANCE!  If a person can qualify, the market is still bearing historically low interst rates, regardless of how low those same rates were 3 weeks ago.  Don’t make these people feel badly about missing last week’s opportunity; help them take advantage of today’s.

There was a great article on NPR the last time the Fed slashed it’s overnight rate, and the major point was that waiting for the bottom of the market is like gambling.  Nobody ever knows when it will come.  When you are talking to your potential clients tomorrow you might add a touch of positive energy and focus on how good the rates are.  And when they ask you if the Fed cut rates, you can say, “Yes.  Yes they did.”  And you don’t have to feel bad about it because it is true.

Tags: Bernake, Fed Rate Cuts, Market News