In this week’s episode, we had the pleasure of hosting Mike Fratantoni, the Chief Economist and Senior Vice President of Research and Industry Technology at the Mortgage Bankers Association. Mike’s insights provided a comprehensive look at the Mortgage forecast on the origination dollar volume, unit increase, headcounts and the effect of AI technology.
Mortgage Market Outlook with Mike Frattantoni of MBA (Mortgage Bankers of America)
Listeners. So excited to have Mike Frattantoni on the podcast today, talking about some of the latest numbers from the MBA. Mike is Dr. Frattantoni as we should refer to him, who got to know him as Mike and what I love about Mike is he’s so real. Yes. He’s. Ph. D. in Economics and all that goes on with, his background in education in the MBA. But he’s here to serve us and I really appreciate him taking time to join us. Mike, thank you so much for being here, Sir.
Thank you for having me. I always look forward to talking with you, David.
You’re so kind. We’re in an interesting market times, Mike, we look at where we’re at and looking at it. Also joining me on the podcast today with as we interview Mike is Bill Corbett, a regular on the podcast. Bill, Thanks for being here.
My pleasure. Thank you, David. Michael as well.
The opportunity we have to talk about today is the latest numbers from the MBA. You have adjusted some of your expectations forecast for what we’re going to be seeing as far as originations this year.
Let’s talk about that. Let’s start there, Mike.
Yeah. Because David, back in December, the Fed really pivoted, right? You had Chair Powell talking about how the next move was likely to be a cut. The question was when. We started this year with rates somewhat lower, certainly south of 7% and I think there was a feeling in the industry of, okay, not cut yet, but boy, you can see the impact when we actually get on the other side of this rate cycle.
And then we had some inflation numbers come in this spring that just, again we’re stubbornly high. And you had more and more fed officials saying, not yet. We’re not in any hurry to cut and when you’re in a purchase market like this, the seasonality of this business really comes to the fore, right?
So much of the volume is going to be done in Q2 and Q3. So, by the time we got to looking at the numbers to make our April forecast, we had to just come to terms with the fact that but we’re, we were not going to have the spring that we thought we were going to have back in January and February. So scale that back a bit. That said, Look at this picture. We are forecasting growing origination volumes over this next couple of years and going from 1.6 trillion last year to 1.8 this year is about 11 percent gain, and that’s coming from growth, both on the purchase and the refi side. So, we did have to adjust our thoughts about where rates were going to go. We still think they’re going to be drifting down over the course of the year. But ending 2024 for a 30-year rate at about six and a half, where we thought it was gonna be six earlier. So that’s the nature of the change we made. Frustrating that we’re not seeing the sort of the level of optimism that we had earlier this year. But I think this is the picture to focus on. Think about growing purchase over the next couple of years.
And then also you talk a lot about the builder business, the new home sales, we’re seeing, some good growth there. Those that are fortunate to have established relationships with builders. They seem to be doing better than those that do not. What are you seeing as far as trends there?
Yeah, it is just night and day difference, right? If you look at our weekly application survey data and at the purchase volume there, yeah, that’s really dominated by the existing home market. All the talk you hear about lock-in, lack of inventory that’s impacting that purchase number. That’s down 10 to 12 percent compared to where we were last year. If you look at another survey, we do our builder application survey, just looking at loans to buy new construction homes. That’s up about 15 percent compared to last year. Okay, builders have smile on their faces and those lenders who are connected to those purchase loans, feeling pretty strong about the market as well. And again, this picture, we are still structurally undersupplied as a country. We just don’t have enough housing units. So I think that builder space, whether it’s the big public builders, or if you’re working with smaller private builders, there’s a lot of opportunity in the new construction space right now.
Why do you think there’s not more building knowing that we had the inventory issues that we do, I would think that we would see even stronger numbers in the building, is it because of a hesitation because of uncertainty as to where interest rates are going, the builders are holding off.
Is that it?
I think there are a couple of reasons that are at play here. One, if you think about the big public guys, they are acting in ways that are somewhat different from the way builders acted in previous cycles. These are now folks with a nationwide platform. They’ve got public shareholders. Their desire is to deliver them a steadier rate of return over time, right? So, they don’t want the boom-and-bust cycle that real estate’s been prone to over time. They want to say, okay Where can we steadily sell homes over the next four or five years not four or five months. Then if you look at the smaller private guys, they’re much more dependent upon bank acquisition, development and construction financing coming out of last spring, a number of banks are a little more cautious, right? We had those big bank failures last year. They’re seeing runoff and deposits. They’re not quite as forward leaning as they were prior to that.
So that’s a great point. I hadn’t thought about that one.
Yeah. Both ends of the builder market a little bit constrained and then you just think geographically, right? Yeah. Where you are, David, in Texas, right? It’s a whole lot easier to get a permit to put in a new home than in California or New England. And similarly, it’s a whole lot easier to build some parts in the Southeast and then even within that, it’s much tougher to build downtown in areas where people might be living, particularly that first time home buyer, that millennials, who’s ready to make the move versus outlying suburbs and even ex urban areas where particularly those big public builders, they can put up hundreds of homes at a time, in a new community. But if you’re just doing infield development, in Bethesda, Maryland, where I live at, that’s a whole lot more expensive. And you just don’t get the unit response that you’d get in some of these lower cost to build areas.
So very geographical is what you’re saying. And then also what you’re touching on with the Home Builders Association, the Home Builders is the regulatory cost that goes into this. I was shocked when I heard the president of the Home Builders Association talked that the minimum cost of regulation in a home is 30% In California, it can be up as much as 50%. Did I hear him correctly? Are you familiar with those numbers?
Yeah, my counterpart, Rob Dietz at the National Association of Home Builders, he puts together those numbers and very credible work. And to your point, that’s tens of thousands of dollars that the builder has to spend before they put a shovel in the ground, right? So, it’s maddening, right? It’s not at all certainly not resulting in more homes and a builder has to factor that cost into their equation. And so, it makes it much more difficult for them to build a true entry level home anymore. So, they really got to start at that, $400,000 price point in many markets, that’s a lot of money for a first-time buyer, right?
And it’s been nice, the last sort of year and a half, two years, you are seeing average home price for a builder come down a bit, right? But it’s 400, maybe it’s 350, right? But some of that’s reflecting that they are moving to some of the lower cost portions of different metro areas and that allows them to bend in that direction. But yeah, the regulatory costs are crazy. Very high.
As I’m thinking as you’re talking, any idea to what percentage of an increase that has been over the years? I haven’t seen a slide on that, that’s again, not something I have been thinking about till just now as you’re talking.
Yeah, I just knew it’s up. I don’t have a figure for you, but you think it’s just layer upon layer of costs. And, if you’re a local municipality you can understand where they’re coming from, right? You get a whole bunch of new residents, you’re probably going to have to build new roads and a new school and other infrastructure, and some cost assess to the builder to account for those costs of the municipality or otherwise bear, but at the same time, you don’t want to be counterproductive about it. So, I think certainly on both coasts, the zoning restrictions on what somebody can build and the regulatory costs that are involved really very counterproductive. I think the only thing that’s a bit of a positive to this, is I think there’s no bipartisan agreement, certainly at the federal level and in many states that it’s gone too far, right? That you absolutely want to protect neighborhoods and you want to make sure that you’re doing what you can to pay for that infrastructure as you go, but you don’t want to do it to the extent that you’re really making it much more difficult to address the housing shortage that we have nationwide. So, I’m somewhat optimistic about that. Again, federal government, states, localities, now all seeing this in a relatively similar manner that we need to back off a little bit to make sure we can provide the housing that our country needs.
You brought up how smaller builders are dependent about community banks being there with funding for them and their understandable hesitancy, given many of the headwinds bankers are feeling.
We’ve also just had another bank failure and there’s concern that we’re going to have a string of more bank failures. Hope that’s not the case. That’s an interesting perspective of what this could do to the smaller medium-sized builders. The big guys don’t suffer from that but talk about that.
Yeah. Over the past 20, 30 years, we have certainly seen the share of all new housing starts done by the larger builders increase, and now it’s getting close to half right of, nationwide and some of that’s again, where, if they can be putting up hundreds of units in some more sort of outlying suburbs where that smaller guy is focused on an infill in a close in suburb, it’s just a different business model, right?
But right. Again, the larger public companies have much, much better access to financing and aren’t as reliant upon that bank financing, which tends to be more expensive too, along with availability concerns. Yeah. Interesting statistic I saw recently and this was from Toll Brothers in their earnings release, that they’re up from 10 percent to 40 to 50 percent of their houses are what they call quick moving, so spec houses and to Mike’s point, they’ve got access to financing to be able to get to that point where the community lenders that deal with the smaller builders they still remember pre 2010 and they’re gun shy, so even if the builders wanted to follow down that path, it’s a long road to get the lender to be comfortable that building more spec houses is not going to be a repeat of past problems.
Yeah, that’s a great point. Absolutely. I’m hearing the same thing and it’s across the board with particularly the larger builders, from a mortgage lender’s perspective, it’s almost the best of both worlds, right? Cause you think about David, this for a mortgage lender working with a builder, sometimes that app to close time was 150, 180 days, right? and that’s because they wanted to align the build time with that financing and lock time makes it a lot more expensive. If instead, they’re lending against a completed property, Yeah. Much quicker return time. So, from the mortgage affiliate that’s good news.
Agree. From the lender’s side, those start to look like a regular traditional purchase in terms of the timing and you don’t have an operations team that’s managing off of two different schedules.
So it definitely does make their life easier.
I want to look at units, when you look at the number of units you’re projecting an increase of 6 percent in 2024 over 2023, but it really starts painting a different picture when you look at the volume levels of what’s been going on historically over going back to 2002 is the particular slide that you were gracious enough to send me we’re looking at right now. We’re anticipated to be at 4. 5. Million units, which is just a tick above where we’re at in 2003. There’s a little bit of a bump again, more of a bump in 2025, but what you look at when we were at the high in 2021, where we had 14 million units, we generally created a lot of, again, refinances in that now we’re down to almost 10,000 less units. Yet, we look at the volume. We all would like to see it better, but it’s not abysmal volume levels, but these units start talking to about a bigger issue and its capacity. I’d love to get your perspective on the overcapacity issue that we’re facing in the industry. And you actually have a great slide. I want to get to this one right now. It’s related head counts across the industry, is still adjusting. Bill and I were talking about this with our group of consultants earlier this morning, and it’s really a picture that says we have not downsized near enough. Your comments on this.
Yeah, we talked to the origination numbers, the application numbers. If you compared to January of 2022 we’re down about 80 percent on the refi side or down 50 percent on the purchase side. That 4.3-million-unit number in 23, you got to go back to the mid-1990s to see a number that low and the 1.6 trillion in dollar volume, you only got to go back to about 2017 or 2018. So I actually had a lender get visibly angry with me when I showed this dollar volume picture at one point cause he was like, it feels much worse than this. Your numbers must be wrong and so that’s when we started, yeah, we started putting out the unit numbers on a more regular basis and just saying, this is really capturing something in the industry that Yes, application volumes down originations down employment’s down about 35 percent across the whole industry. A little bit less than that, if you just are looking at Los . These are coming from different data sets. If you look just at IMBs Down sort of 41, 42 percent compared to their peak, but not the 50 or 80 percent that we’re seeing in terms of retail application volume. So what’s the difference? I think there’s two things. One, I think you’re right. I think we’re still going to see some capacity come out but two, remember back to the pandemic, right? March of 2020, world’s about to end. Then rates plummet to absolute all-time record lows. Volume is off the charts. You remember what every lender was saying at the time, they can’t hire fast enough. Yeah, there’s, and they were poaching each other’s season, processors and underwriters sales and, enormous signing bonuses for processors, it thinks we just hadn’t heard before. And so, I think one reason why we don’t have to cut as much as volume has fallen is because we didn’t hire as much as we probably needed to do.
Yeah. You heard I remember all the stories in 2021 about execs worrying about burnout on their staff that folks had nothing else they could do. So, they were working 18 hours a day and you can only do that for so long. And we saw it in our productivity numbers to So you’re familiar with it with those data that we put out where it’s, you look on the LO side, for 25 years, your typical LO in this business was closing four loans a month during the pandemic refi boom, it was six, right? So we were getting tremendous productivity out of every part of the organization. Now it’s much lower than that, another thing that we look at is if you look at closed loans across. The entire production organization that’s averaged about 1. 8 loans per month. Going back, 15, 20 years that got as high as three during the refi boom. Right now we’re at about 0. 9. Exactly to your point, so there’s evidence we didn’t hire enough during the boom. There’s evidence we haven’t quite consolidated enough yet. I think that’s still going to happen through layoffs, through just attrition, through consolidation, but we’re hearing about consolidation just about every day. So I know you’re involved in some of those deals ‘
We’re involved in some of those transactions. One of the things that we’re looking at was, I don’t have this slide in this particular deck. It’s really the loss per loan. It’s over $2,000. In the most recent study, seven back to back quarters of losses. And it looks like the first quarter that was through fourth quarter of 2023. first quarter, I think is going to reflect a loss. Hopefully we’ll see in the second quarter more and more people are telling me that they’re profitable, that’s staggering numbers. And it’s not sustainable, obviously. Thoughts about what does this mean? Where does this mean for IMBs? What does this mean? Are we seeing a shift more to the regulated world where more of the originations are going to be done by banks and regulated institutions?
So great question. As MBAs membership, 2000 companies include everyone. I love all my children equally and all my members equally as well. But if you look at the trend post great financial crisis, IMB origination, market share. Just keeps growing pretty steadily servicing market share just keeps growing. And I blame that more on the bank regulatory environment, right? The conversation right now, the proposed Basel 3 end game, if it goes into effect as proposed, banks are just going to pull back further. And that’s the regulatory side, on the economic side, I think there’s something to the momentum that, once you have a servicing portfolio that if you do ever get any refi opportunity, it’s much easier for that existing service or to retain some of that business than for a new player, even a bank to jump in.
So, I think IMBs have a little bit of momentum and advantage here. I expect that’s going to continue. But I think they’re subject now to some increasing scrutiny from regulators, certainly at the federal level. And then, particularly now, as they are the majority share of servicing, that’s where a lot of the focus is. Some additional capital liquidity requirements coming from Ginnie Mae in particular, to make sure they can handle those advancing responsibilities. But you nailed it in terms of the last number, seven straight quarters. First quarter. Unfortunately, I agree with you. I think like likely to be negative as well. But again, think about the seasonality of this business in a purchase market, 2nd and 3rd quarter. That’s where the volume is. To say, DCRA right now. Azaleas are blooming. It really is spring. People are out there now. Listings are up. People are looking for homes. They’re okay with 7 percent mortgage rates right now. They’d like them to be lower, but I think we’re going to see a sales season. And so, agree with you that the second and third quarter should be positive.
There was a recent article in a Sunday wall street journal about the number of people that are giving up their low rates because life has happened. We’ve thought so much, we’re locked in where no one’s going to leave these rates. We’re not going to have inventory, we’re trapped in this low rate structure that everyone got into in that last refinance boom, that is starting to show up more and more every month. People are saying, I have to do something. I have to move on your perspective on this as it relates to that, those that are having to be forced. And you have any indication that this is starting to increase.
Absolutely. And I think, again, you’re seeing the listings pick up over the last couple of months and I think the lock in effect that everybody uses the term, but I think it’s mischaracterized a bit, right? The notion is not that people aren’t going to move. it’s friction, right? It’s a consideration. People don’t want to give up a two- and three-quarter rate. It totally makes sense and I, think sometimes that amongst sort of the mortgage banking world, we talk to ourselves. And we’re a bunch of financially sophisticated people. Sandra Thompson, the director of FHFA has said, I’m never going to leave this house. And it makes sense, or you’ll hear somebody say if I move, I’ll just rent the property out and there are people at a certain station in life who, that’s absolutely a reasonable thing to do, but not everybody’s there, right? For most Americans, if they move, they sell the house, right? because they got a new job, they’re moving because they had a kid, because they’re getting married, because they want to go be closer to the grandkids, there are non financial reasons why people move.
And the finances are a friction, they don’t bring things to a halt.
I think it’s so true. This article talked about health issues that develop with so many, and especially aging baby boomers that have that. And that’s been a bigger factor than anything else that’s driving that. I want to get in and talk a little bit about your thoughts on where interest rates are going.
What can we anticipate? You have given us some updated projections. Could you talk about that, please?
Sure. With the inflation news that we’ve had so far this spring and with the job market news just this morning, the April data came out generally coming in a bit stronger than most had predicted yet.
You see the fed. Becoming more hesitant to say we’re going to cut soon. So, we’ve moved our forecast from previously we thought three cuts this year, four next year. Now we’re thinking two this year in September and December, still three or four next year. Market, fed funds, futures vary by the minute.
Sometimes it’ll say just one, sometimes it’ll be, maybe three. And again, the news this morning from the job market was a little weaker than markets had expected and so now I think at least 2 sort of fully baked in and those futures markets once again. But as I like to say, the futures markets don’t actually get a vote. There are the FOMC members who can make that decision. And I think the next thing really to watch for is at the June meeting they’ll put out their next set of projections. The projections in March looked from the median member for three cuts this year. It’ll be really interesting to see in June whether they move to two, hold at three or say something different. Longer term rates are the market’s best forecast of where short rates are going to be over that long horizon and so again, minute by minute, trying to incorporate all the data and what it means for expected monetary policy.
So, for a 10 year treasury, which was as high as mid four sevens just earlier this week is about four and a half today. We think getting down closer to four by the end of 2024 and a 30-year mortgage, which was seven and a quarter to seven and a half, probably low sevens today. Now we think getting to about six and a half by the end of this year, low six next year.
That’s encouraging to hear. And as they say, from your lips to God’s ears, that happened as that whole thing goes. build. Bill, let’s you jump in here with a couple of questions you might have.
So first observation, and that would be great Mike, there’s some other data that is out there that seems to be showing pretty solid evidence that six and a half is right now seems to be the sweet spot, pulled more people in, into the market. Mike, my question for you is on the slide showing units going way back to the early 2000s when I first saw that. And I think I’ve been in a bit of a funk ever since. no, that’s okay. It’s because I keep coming back, trying to figure out both why and what it really means that 2021,
2022 when everybody agrees you could not get another loan through an origination shop, and it’s half the number of units that we did in 2003. And then, like a lot of folks, I was in the business back then. And I know refi’s were easier than, because it was a lot if it’s a limited cash out and their payments dropping, just sign and move on. But I keep coming back to whatever was causing and is causing that friction, I think is still driving a lot of inefficiency that we’re seeing today and maybe that’s why folks can’t be reducing head count as much as the numbers seem to indicate they should., That’s a good point. And yeah, so I started in the industry in 1996 at Fannie Mae and remember very much the 2003 refi wave, but also remember the 96 and the 98, right? and then the 03 was just this monster. And a lot of the conversation around 03 was about the trailing docks problem. Remember nine months, a year later, people were still trying to tie things down and we’re better about that now. I think I will often say that, you see the big investment in technology that so many lenders have made and it’s hard to see the payoff of that and productivity, but you can see it in that kind of an example of, we did these two enormous years in 20 and 21 and things seem buttoned up pretty well, some concerns about, an increase in repurchase demands from the GSEs in 22 looking back at those 20 and 21 loans.
But nothing like what we saw in previous cycles. So, you wish the industry could scale up and down. Even better than it has but we’re making progress with sort of one investment at a time.
And certainly, technology has helped a lot in this. When you go back and look at the cost originate, do you have any thoughts of any hope of that dropping? A lot of that is because we’re over capacity and if we got too capacity, not saying that it will happen, but any thoughts, what is that number? Is this where we should expect to be? Our current cost levels should be at these levels if you just look at the expense side of it, What’s your thoughts?
Yeah. So yeah, you go back to 2008. Our cost for originating number was call it 4,000 fourth quarter of 2023. It was 12,500 and you look by business model, those vary a bit, but what really varies is, for an IMB maybe 60 percent of that cost is sales. So, going to your loan officer then you have a chunk going to fulfillment, a chunk in corporate costs for a large bank, it’s about 50% go into sales much more corporate costs. So, a lot of corporate marketing and a lot of corporate overhead and that all in costs originate generally much higher for that large bank. So, if you think about. Where are you gonna squeeze the cost out of this? People often think go to fulfillment and automate more and more technology and that’s really where some of the regulatory demands have really put a heavy load, right? You need more compliance folks. You need more risk folks. You need more legal in there to make sure that everything is buttoned up so that you’re not getting a false claims act from I’m feeling fine from FHA and you’re not getting loans kicked back to you by the GSEs. On the sales side, that’s more in your bailiwick, David. I’d love to hear what you think about there, right? I think a lot of lender CEOs have told me that, if the goal of the LO compensation regulation was to reduce LO compensation, that didn’t work. I think that that was not the goal. The goal was to make sure that borrowers weren’t steered to inappropriate products. And I guess that’s, I think you can claim success there, but You do hear, again, if you talk to executives, just a sense of, at some point, if you could get instead of four closed loans per LO per month, you can get five and they get paid the same amount for those five. The commission and basis points come down a bit, but their take home pay is the same and they get from four to five because your given technology, or you’re making some other arrangement with respect to how leads are sourced. tell me, what do you think is the answer there? But the compliance costs, I don’t see those coming down. But maybe they won’t go up if we can keep the regulators fixed on, okay, you already solved the problems from the financial crisis. We don’t, we’re not seeing the same level of problems anymore. And then the sales costs, I think that’s really about productivity. What do you think?
You can’t correlate to where our current sales costs are by anything other than just demand for those people in the market. For those that are good originators, they’re still paying sign on bonuses and there’s just such a demand. We do not have a more efficient means to do that by which we can originate loans and it’s because this is the biggest transaction of anyone’s life. They want to talk to humans, even millennials who prefer to start as and I want to get to technology because you also oversee the technology parts of the MBA even with technology is offering all this millennials want to start there. They still, at some point in time, want to talk to a human being that the decision they’re making in the most biggest transaction in their lives has any of that changed your perspective? And as long as that dynamic stays there, I honestly don’t see this changing anything. So it’s really a law of supply and demand. It’s the supply of good season loan officers. And as long as the demand for them stays at these levels and sign on bonuses are going to be there. I don’t see anything changing on this. I see different ones trying different things. I, we always look at that. I don’t see that really changing much.
Yeah. I agree. I think, sometimes people get it backwards. They think, okay, your tech savvy millennial. That’s who’s going to gravitate towards a fully online process. No you’re a repeat buyer, someone with some gray hair in their head, doing their fifth refinance. They know the process , they’re happy to do more of it themselves. But, we’re in a world where most of the purchase business is being done by first time buyers. And to your point, that is terrifying. The first time you sit down and, just you’re signing up for 30 years of payments and you see that total interest over the life of the loan. That is the most terrifying disclosure you’ll ever going to see in your life and they need help every step of the way, regardless of how tech savvy they are.
And I think if what technology is going to allow us to do more, we’re looking at artificial intelligence, specifically Angel AI, which is one of our sponsors of our podcast and we’re seeing great productivity improvement in this. It allows them to focus on the most important part of the transaction. Talking about the mortgage loan originator, the most important part of the transaction is to be there to reassure them The people on the journey. I want to talk a little bit about technology. I know we’ve got some conferences I want to touch on that are coming up as we wrap this up, but what’s your perspective on the technology. Are you seeing more consolidation in that realm? We look at some of the big ones out there and how big they’ve gone. Is this sustainable? What’s your perspective on technology and what we can expect?
Yeah. I think, when I was at Fannie and then when I was at Washington Mutual, I was in risk management positions and I think that’s really the mindset that’s driving some of this consolidation that if you look at whether a bank or an IMB vendor risk management is a very important consideration, right? and it is a process to get a new vendor approved, and once that vendor is approved, if they can offer you multiple solutions, that’s honestly probably going to be easier decision to make than if you’re going best to breed across every single process that you’re looking at.
So I think that vendor risk management process and hurdle and challenge is helping to facilitate some of this consolidation along with this chart that we were looking at that where LO is paid basis points of dollars, the vendors paid on units for the most part. So, they are getting hurt much worse, even than certainly the sales staff at a lender production in volume. One interesting thing that I’m hearing a lot is, you mentioned use of AI, right? And for something like generating a prequal letter, that just seems like the perfect use case, right? Because I think for an LO, that’s probably the most maddening thing they do of, something that has a very low probability in this low inventory market of actually resulting in a loan and yet still takes time and so if that can be handed off, maybe that’s one of the tools more and more lenders can use to improve that LO’s productivity.
Yeah, there’s no question about it. Let’s talk about some of the upcoming conferences. Mike MBA puts on some fabulous event. I know we have got the Chairman’s Conference coming up. I’ve recommended the number of our clients going to that. That’s an outstanding conference. Some of the other things talk about the Chairman’s Club and why should someone go to that? That’s one of my favorite conferences. I think one of the most significant ones going on. So, talk about that. And some of the others coming up, if you would.
Sure. Yeah. Chairman’s in Santa Barbara this year. It’s a smaller conference, really aimed at the senior executives in our industry. And what I’ve noticed year after year is that the folks who attend the conference, right? If you go to some of the bigger events, everybody’s in their own suite, meeting after meeting, here they go to network with their peers and really engage in the content that MBA is providing. So it is one of my favorite events of the year. Before that, New York in a couple of weeks, we’ve got our secondary conference, always a real highlight. And a couple of things to note there. We have Vice Chair Jefferson, the vice chair of Monetary Policy at the Federal Reserve as a speaker. He’s on right before speak. I’m having Gina Curo, who’s a MBS researcher at Bank of America joining me for that conversation. So really looking forward to secondary. And, of course we’ll have all the regulators represented from CFPB and the government agencies to after that 1 thing that you may not be aware of that I’d really love to highlight is later in June. We have our research showcase. Now, this is a totally virtual event. So, we do it over the course of two days, two, four-hour sessions. And I’m a data junkie. Everyone on my research team is a data junkie and we always feel constrained because when we go to an MBA conference, we’ll get a half hour or 45 minutes. That’s barely enough for us to get warmed up, right? We have so much data coming out of our group. What this showcase does is, literally over the course of eight hours, we walk through in depth, every data point you would want to see that comes from the various surveys that we do. And again, the point of pride for me is it’s not Mike talking for eight hours. Thank goodness. Every one of my staff members, the folks who actually put this data together, are presenting the projects that they’re working on. It’s a bit of a hidden gem within the MBA set of events, but if, again, if you’re a data junkie and you appreciate what a research group puts out, I’d hardly recommend that you attend that event.
Yeah, I’m going to be absolutely attending that event. Business intelligence is probably one of the most important things we have now and that sounds like there’s just going to be a lot of great data intelligence coming out of that. What can someone do with that data? As you look forward with this data and the relevance to where we’re heading is if we know our history, we’re doom to repeat it, but we’ve got to look at where things are going. Thoughts on that. I’m trying to entice our listeners to be a part of this thing because the world is changing quickly, but we’ve got to base that change on the data points that we see and what you’ll be presenting no doubt.
Yeah. You always say that if life gives you lemons, you make lemonade, right? So the lemons we got right now are this rate environment and the lack of inventory. But if you look at that forecast that we have, whether in dollars or units, this is a slow uphill climb, a purchase dominated market. We think the next at least three years may be longer than that. And the challenge with mortgage lending has always been, you set your course and then all of a sudden, a refi boom comes in and you’re blown off course for a bit. You forget the tech investment you were trying to make. You forget the process change because you just got to let the volume, the fish are jumping in the boat. Let’s do this now while we have the opportunity. I think it’s going to be a tougher environment, but it’s going to be a steady environment. So, I think those lenders who want to get themselves on a course, set a strategy, whether it’s tech strategy or a channel strategy, whatever changes they were thinking about making. I think they’re going to have a couple of years to really run with that. And I think from an efficiency perspective, that’s almost ideal, right? cause if you’re sailing you can really trim the sails to the steady wind that you’re going to get for a couple of years without having to change direction every couple of minutes. Obviously, nothing’s ever certain, but I think it’s likely to be a more stable environment for the next couple of years. So for those folks who are in for the long haul, get ready for this environment we have, I think it can be a good business operating environment.
That’s good. What are the dates of the research virtual conference? Yeah. So our research showcase is going to be June 25th and 26. It’s a virtual event. If you register for it. Again, you’re going to be able to watch it on a recorded basis on your own time. But again, really hardly recommend if you’re interested in our data, interested in our outlook. I’ve really enjoyed doing this event for the last couple of years and think you’ll enjoy listening to it.
What’s the cost of this for members versus nonmembers? I’m sure we have a number of non-members. Everyone should become a member, but you have the cost of this yet. Yeah. So, it’s $299 for a member. And $599 for a non-member. I think in all the presentations, we’re going to have eight hours of presentation materials that will be yours to absorb at your own pace as well.
Oh, good. Yeah. Sign me up. That’s at the same time, the Total Expert conference is going on in Minneapolis, so I’m going to be at that. But I will register and I’m going to sneak off and join live wherever, every time I can, because I think I’m a data junkie. I just love looking at data. I think this is so good. Kudos. I am very excited. That’s the little Easter egg in this podcast. We found out about this event. That’s coming up. Very exciting. Not to say that people shouldn’t attend the secondary and all the others, but this is just especially the Chairman’s Conference. It’s one of the ones that you nailed it so well. You think chairman, anyone who’s at the, some of the larger companies show up there, some of the more established company, but it’s really interesting. Every session is well attended. I’ve spoken at it before. I love being there. But it’s the conversation around afterwards that’s going on as people are presenting. That is going to be one. I wish I could be at that one. Unfortunately, my wife’s having surgery, so I have to stay home from that one this year, but kudos to you. Thank you so much for joining me today, Mike and Bill. Appreciate it. What a great amount of contact. I could just stay here and visit with you forever. I really appreciate Mike, what you do, what Marina and your whole team, all your staff, there’s so many that work so hard to help bring us a good perspective of what’s going on. And then we’re just so grateful for the MBA for all that they do. We’re grateful for the partnership and grateful for you, Mike. Thank you.
Great. Thank you. Thank Bill. I appreciate the opportunity to be here and look forward to seeing you at future events over the course of the next couple of months.
You will. You’ll see me at the virtual one. That’s for sure. All right. Thank you so much. Have a great day. All right. Thank you.
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Michael Fratantoni is MBA’s Chief Economist and Senior Vice President of Research and Industry Technology. In this role, he is responsible for overseeing MBA’s industry surveys and benchmarking studies, economic and mortgage originations forecasts, industry technology efforts, and policy development research for both single-family and commercial/multifamily markets. Additionally, Fratantoni is a member of the Board of Directors of MISMO, the membership committee of MERS, and the Smith Enterprise Risk Consortium’s (SERC’s) Advisory Council.
Prior to joining MBA, Fratantoni worked in risk management and senior economist roles at Washington Mutual and Fannie Mae. He received a Ph.D. in economics from Johns Hopkins University and a B.A. in economics from The College of William and Mary, and has served as an adjunct professor at the University of Washington, and Johns Hopkins, George Washington, and Georgetown Universities.