Above, Shant Banosian. Photo by AJ Canaria.
Few residential real estate professionals have their pulse on the mortgage industry more than Shant Banosian, EVP of sales at Rate (formerly Guaranteed Rate), in Waltham, Massachusetts. He’s been their top loan officer for nine consecutive years, and top officer nationwide for six years running, with over 40,000 closed units and $10 billion in funded loans throughout his 20-year career.
In a discussion on financing solutions this past September at RISMedia’s 36th Annual CEO & Leadership Exchange, he addressed three main topics: the Federal Reserve’s interest rate policies, market opportunities from improved affordability and financing solutions. He predicted that interest rates would decrease, enhancing affordability and stimulating the housing market, while also highlighting the potential for increased buying power and inventory as rates drop, and the positive impact on home prices and mortgage applications.
“The Fed is attempting a soft landing,” he said. “We are at the very beginning of their soft landing party. What I think they’ve done over the course of the last couple of years is actually pretty good. They were dealt a really tough hand and they managed it pretty well. Look where we are now. The prices are the highest they’ve ever been. The stock markets are at all-time highs and unemployment is relatively low.
“The Fed chairman has changed his language in terms of his confidence around where things are at with inflation. He was saying he wanted to see the data to be confident. Now he’s saying he’s confident the data issues are supporting their changes. So clearly they’re not doing a really great job tracking that stuff. There’s almost a 100% chance of rate cuts throughout the course of the rest of this year and into next year. Whether they’re going to be a quarter or half percent is to be determined.”
Banosian predicted Fed rates in the next year to be in the 5.25% to 5.5% range, which would translate to about 6% mortgage rates without any points.
“When rates come down, you’ve got more buying power, you’ve got excitement, you’ve got affordability that will prop up home prices,” he said. “Either have them stay stable or increase in certain markets, depending on inventory. The other people that benefit with rates coming down are homeowners. So if their lives change, they’re going to move, but if rates come down, they’re going to refinance, and there will be more stimulus into the economy from that as well.”
Banosian noted that mortgage applications haven’t really seen a bump yet because of affordability, and also that rates came down fast in the summer.
“There’s been a lot of talk about inventory being up about 36% year-over-year,” he said. “A lot of that’s coming from places like Texas and Florida. The Northeast is still struggling with inventory, and certainly other parts of the country as well. I think sales are going to continue to increase.”
Banosian also stressed the importance of strong relationships between real estate agents and loan officers, advocating for loan officers to be actively involved in client interactions and transactions. He encouraged professionals to differentiate themselves through value-driven processes, rather than competing on price alone.
“Life does not stop because of interest rates. People are going to keep doing business, but when things get better and affordability improves, they’re going to come flying in.”
Regardless of what’s happened with buyer commissions post-Burnett, Banosian thinks business will continue to be done mostly the way it always has been.
“Sellers are going to agree that they should compensate buyer agents in order to attract more people to market their properties and to drive their price up for what they can sell their assets for,” he said. “And buyers are going to want to finance it, because it’s the American way. You buy a house, you get a mortgage. You buy a car, you get a car loan. You go to school, you get student loans. You go to the store, you put everything on credit cards. Clients even ask me if they can finance their closing costs.”
