Read more: Average 30-year mortgage rate rebounds
Foremost among these alternatives, Daik said, are non-QM loans. He has seen a significant improvement in prices for non-QM products, from 9% five or six years ago to 5% on an investment property today. While he doesn’t think these loans are as good as a 30-year fixed loan, they’re pretty close.
To handle the additional demand ahead, Daik has hired two additional loan officers over the past 60 days. As demand for these loans grows, the sheer supply of housing will limit any increase in volume, even for lenders best positioned to benefit from this new agency restriction.
When these deals arrive, however, they will be priced higher than a conventional loan. Government underwriting lowers the price of a loan, something the entire industry has learned for a decade now. Daik strives to explain to its clients exactly what is happening in the market and why their loan might be a little more expensive than it otherwise would be. His strategy, he said, is to deliver good news with bad and offer an attractive alternative to lending that is no longer on the table.
Read more: Fromer MBA president pleads guilty to bank fraud and money laundering