Chase executive says sustainable payments matter more than rate forecasts
For one senior executive in the lending space, the more important question is not where rates will be in 12 months but whether the payment a buyer signs up for today is sustainable regardless of what happens next.
Erik Schmitt (pictured top), head of consumer direct sales at Chase Home Lending, said the industry has a habit of reassuring customers that a refinance will be available when rates drop. However, when rates remain elevated, that refi keeps getting pushed back.
“The most important thing I think we do as an industry is to make sure housing is sustainable,” Schmitt told Mortgage Professional America. “It’s all what happened during the financial crisis. Mortgages were not necessarily affordable for some consumers, and really bad outcomes can have a prolonged impact on your credit, cost of credit, and your access to future housing.”
Payments must be sustainable
Schmitt said the pattern he worries about is not unique to any one lender or loan type. It is a mindset that a rate reduction coming down the road justifies stretching into a payment that is uncomfortable today.
“The most critical thing to make sure, regardless of the rate environment, is that the current payments you sign up for are sustainable,” he said. “You’re not counting on a future refinance to make it affordable. You’ve got to make sure because it’s very hard to predict that.”
