See Also: Mortgage Lenders Targeting Doctors for New Home Loans
With mortgage rates increasing, home prices on the uptick and countless first-time buyers getting priced out of the real estate market, lenders have set their sights on the nation's doctors, hoping to get them into a new home and mortgage.
That's according to CNBC, which polled lenders around the country to get a sense of their activity geared toward doctors and medical professionals. Bank of America Corporation (BAC) told CNBC that the dollar volume of mortgages held by doctors has increased ninefold from 2008 through 2017. Meanwhile, Bank SNB, the Oklahoma bank owned by Simmons First National Corporation (SFNC), told CNBC that it has issued $50 million in mortgages for physicians in 2017 and expects to double that in 2018. The mortgage unit of SunTrust Banks, Inc. (STI), headquartered in Atlanta, has increased the staff that serves doctors and medical practices during the past four years as it has seen an uptick in demand for mortgages for the group. LeverageRX, which provides mortgage rate comparisons services to doctors, told CNBC that it has seen a 51% increase in physicians looking for mortgage loans year to date compared with the same period a year ago.
The mortgage lenders are going after doctors given their high salaries and stable employment, which makes them low-risk customers for the lenders. With the average doctor making around $300,000, banks don't have to worry as much about these borrowers foreclosing on their home. This is not to mention that doctors who are just starting out have the capacity to grow their income meaningfully, providing lenders with opportunities to engage them with other products and services.
"You're a student, emerging physician, hit with all this debt. You have a lot of future upside," John Cross, divisional sales executive at Bank of America, told CNBC. "If you provide a mortgage solution at the beginning of their career, … from there it turns into all kinds of other conversations." Given doctors tend to have large student loan debt upon graduation from medical school, lenders are being stricter with their borrowing requirements. For instance, Bank of America's Cross said that doctors have to come up with a down payment of at least 5% instead of getting into a zero-down loan.
The focus on doctors comes at a time when lenders are seeing a decline in new mortgage applications. According to the Mortgage Bankers Association, total mortgage applications for the week ending April 27 fell 2.5% from the week earlier. Leading the decline, refinance applications fell 4%, while purchase applications dipped 2% from the previous week. The Refinance Index decreased 4% from the previous week, as refinancing activity is down to 36.5% of all applications from 37.2% the prior week. That's the lowest level since September 2008.
Source By: INVESTOPEDIA
