David Licciardi is the area manager for Main Street Home Loans in Warwick and North Attleboro, which he co-founded more than five years ago and is now licensed as a residential mortgage lender in 42 states. Licciardi studied finance at the University of Rhode Island and has been in the home loan industry for three decades.
PBN: Is it true that springtime brings a frenzy of activity for home loans? What's that like and why is this the case?
LICCIARDI: Yes, that is typical in most years. The spring buying market is usually what everyone in the real estate and mortgage industry looks forward to, especially after a typical New England winter.
We’ve been pretty lucky with winters over the past few years, but unfortunately the rates and inventory of homes has not been friendly to the spring market. But usually, it’s busier because the weather turns warmer and gets people out of the house and going to open houses every weekend.
Another reason is that families that are planning to move start looking in the spring because they want to make sure they have plenty of time to find a home and move in before the following school year.
PBN: What is the approval rate like for home loans right now compared to previous times, given the economic situation in recent years with high inflation and rising interest rates?
LICCIARDI: Even with higher rates and low inventory, the same percentage of prospective buyers are being approved. I would definitely say loans are more difficult in the last two years than in previous years and may take a little longer to get approved or get to the closing table, but most eligible buyers are still able to get approved for their mortgages.
PBN: What are your expectations for how interest rates might fluctuate this year? Could there be a drop? What is your forecast for the rest of 2024?
LICCIARDI: When it comes to rates, the “experts” have been wrong for the past year. Rates were first rumored to drop in the third quarter of last year. Then it was supposedly pushed to the fourth quarter of last year. Then it was adjusted again to the first quarter of this year, and outside a quick one-week drop in rates in December when the Fed [Federal Reserve] announced an estimated three rate drops in 2024, rates have been stuck in the high 6s and low 7s.
Do I think rates will drop in 2024? Yes, I believe we will see some rate relief, possibly in late summer and then again toward the end of the year, but the Fed has been consistent with their approach that they are not doing anything until they see inflation low enough that they feel it is safely below the threshold they have set for it.
Add to this that it is an election year and many times in an election year, there are no big policy changes prior to the election, which could result in more of the same.
PBN: One of the main issues we've heard about from real estate agents over the past couple of years is low inventory. How does that impact your role in the housing market as a lender?
LICCIARDI: The lack of inventory is a huge problem for the mortgage industry, too. Lenders are producing preapproval after preapproval for their buyers, but the percentage of preapprovals that turn into actual purchase transactions is extremely low right now. As soon as any home that is in average condition or better hits the market, prospective buyers swarm to it to try to get their offer accepted, which leads to most homes selling for well over asking price. It’s not unusual for homes to sell for $60,000 to $80,000 over the asking price right now.
I tell my buyers that the asking price is just the ticket to the dance. Buyers are not going to get an offer equal to the asking price accepted on most homes. You know inventory is low when I am seeing three to four of my clients all interested in the same exact home, in some cases, and wanting to know how much they are able to offer on the same home as another client of mine.
PBN: What's your advice for those who are looking to get home financing for the first time this year? What do they need to do to get ready before approaching someone like you for assistance?
LICCIARDI: The best advice I give all prospective buyers is try not to get frustrated. Most buyers start the house hunting with a very positive attitude and much excitement. However, it’s easy in today’s market to feel beaten down after making a few offers on different properties and not getting your offer accepted. Creativity and persistence are the names of the game right now. Many top agents have discovered new and creative ways to elevate their clients’ offers to the top of the consideration pile.
My advice to those getting ready to speak to me or another lender is to save your documents if you don’t usually do so. We are going to need to see your actual paystubs, W2s, bank statements and, in some cases, your tax returns. If you didn’t keep them and don’t have access to them, it could delay you in your quest for a preapproval letter and loan approval. But call me, Dave Licciardi, and I will be happy to help you get preapproved.
Marc Larocque is a PBN contributing writer. Contact him at Larocque@PBN.com. You may also follow him on Twitter @LaRockObama.
