Page 20 - BusinessWest August 8, 2022

Mortgage includ- Continued from page 18 ing mort-
gages, have required banks to balance that reality with the
needs of borrowers.
“In our case, how do we best position that rate
for what the bank needs as well as what is good for customers and the community as a whole?” he said. “When rates were rising, we were probably looking at it daily. That’s not typical; we try to set rates as best we can for a week, so customers and Realtors are looking at something they can rely on, so they can plan.”
That daily whiplash has stabilized somewhat, to where the bank may alter the rate an eighth of a point during any given week, he added.
For this issue’s focus on banking and financial services, BusinessWest talked with several area industry leaders about why mortgage interest rates have been so volatile lately, and how they’re addressing the needs and concerns of borrowers.
Bottom-line Impact
Craig Boivin, vice president of Marketing at UMassFive College Federal Credit Union, under- stands the historical picture of mortgage rates, but also sees consumers’ side: that buying a house in 2022 will cost them significantly more on their monthly bill than a house bought for the same price in 2021.
“Compound that with the fact that rents are higher, and it puts people in a position of ‘should I bid on houses when the values haven’t come down yet, or pony up another year of rent, which has increased a couple hundred dollars as well?’
“We’ve had a lot of conversations internally about how to help people get into homes,” Boivin
went on. “Home ownership is one way people move into a higher economic class. We also know how homeowners benefit from values going up, as they can tap into home equity. So, how do we help people navigate this crazy environment?”
One way is by offering a wide range of prod- ucts and matching borrowers to the right ones. For instance, UMassFive’s adjustable-rate mort- gage product, which offers lower fixed rates over the first several years, followed by variable rates later on, can be a solid
option for certain people.
tage Mortgage, back around 2008. CUSOs allow a number of credit unions to create scale by pool- ing their resources on a particular program — in this case mortgages — which allows them to craft unique products for their members while weath- ering the kind of economic volatility that can upend business.
Lauren Duffy, chief operating officer at UMass- Five, is executive chair of the Member Advantage Mortgage board of directors, “so we have direct
“The whole goal in all of this is to cool down the overheated market, try to slow it down. If the Fed doesn’t take any action, you could be mired in inflation for a long time. And that’s certainly not
to anyone’s benefit.”
oversight and a lot of influence,” Boivin noted. O’Connor said Westfield Bank helps potential borrowers through its pre-qualification program, called ‘lock and shop.’ “They leave here knowing
what their level of affordability will be, and their payment, based on current market rates. Then they can go out there and do some shopping.”
The idea is to avoid situations where shoppers think they’ve found the perfect home, only to find it’s unaffordable later, based on current rates, he explained.
“That’s certainly helpful. We want to take the uncertainty off someone’s head and give them
“Those loans got a bad rap in the 2000s leading up to the housing burst because there was a lot less strict criteria around granting mortgages; some financial institutions were giving loans to peo- ple who couldn’t afford them,” he explained, which led to financial pain when a loan’s rate shot up.
MIKE OSTROWSKI
But some customers are ideal fits for these types of loans, he said, such as first-time home- buyers who are already planning to move to their next home early in the loan, or medical residents who move around often, or professors who don’t have tenure and expect their current job to be transitory.
“One of the main reasons we can offer such a wide range of products is the way we set up our mortgage department,” Boivin said, noting that UMassFive invested in a credit-union service organization, or CUSO, called Member Advan-
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