- Melinda Fricke Joins Pacific Western Bank as SVP, Business Development Officer for Asset-Based Lending in North Texas
- SFNet Provides Summary of Economic Aid Act
- A Closer Look at Retailer Resilience During the COVID-19 Pandemic
- Huntington Business Credit Closes $250 Million Credit Facility with Concordance Healthcare Solutions, LLC
YoPro Leadership Summit - Economic Panel Discussion Recap
By Eileen Wubbe
This year’s YoPro Leadership Summit, held virtually August 26-27, 2020 brought together the young professionals of the secured finance industry for opportunities to hear from industry leaders, connect with peers, and to discover together how to find success in the post-COVID environment. This year's theme was "Succeeding in the New Environment."Panels included an Economic Discussion, focusing on wealth management and personal finance, Standing Out While Working from Home, Lending Through COVID, with an exploration of the changes in credit and legal due diligence during a pandemic, and a Titans Roundtable, consisting of industry leaders discussing career advice and experiences going through the ranks as well as managing their teams during COVID.
The Economic Discussion featured moderator Miin Chen, CFO, Siena Lending Group, and panelists Ted Leh, managing director, Goldman Sachs and Shannon Saltos, private banking regional managing director, Wilmington Trust. Panelists dove into wealth management and their outlook on the current private banking landscape, explaining how they help navigate their clients' liquidity, major life milestones, personalized capital solutions and how they integrate that with estate and business planning. Leh kicked off the panel discussing the historical ups and downs of the stock market and how to stay calm through a turbulent economy.
“Even though we had one of the worst pandemics in 1918, the stock market actually went up during that period,” said Leh. “When we had the terrible news in February and March of this year about the virus, and it was truly terrible, we didn't lose our cool at Goldman Sachs. In fact, we went overweight on equities in March and in April, because we knew we would get through this. We knew the health care system in the United States is better than it was 100 years ago. On top of that, the Federal Reserve, President and Congress put an unprecedented amount of liquidity and stimulus into the economy. The market had an extraordinary drawdown in March. In about 20 trading days the market lost about a third of its value. But, because of the tremendous amount of liquidity that was put in, the market has snapped back rapidly.”
At a time when many young professionals may be looking to buy their first home, the panelists discussed the current state of the housing market. The yield curve stayed relatively flat, resulting in long-term interest rates staying low, which encourages people to spend and put money back into the economy.
“We're seeing mortgage rates in the 2 to 3% range, which makes it really affordable for people to evaluate their current debt structures and residential mortgage structures,” Saltos said. “You can work with your banks to look at creative repayment options if you want an interest-only repayment or principal repayments. Taking the time to do that and evaluate where you're at today, and what your goals are, could not only get you lower costs for the long term, but also generate some liquidity that you could invest in the market. Pick up the phone and call your advisers, your CPAs, and your bankers and say, ‘Can I save money here? Does it make sense for me to purchase now versus rent, because I think that it's a good time’.
Saltos added that single-family homes are at a premium right now with a shortage of supply in the market and home appraisal values are strengthening. Particularly in the Northeast, as home prices rise, buyers could find themselves in a competitive bidding situation.
“If you're going to purchase, talk to your bank about a pre-qualification or a pre-approval letter so that you’re a competitive bidder when you come to the table and they know that you're qualified,” Saltos added. “One of the things we caution against, as you're building your balance sheet and your assets, is don't over-leverage your home, keep it 70 or 80%. That gives you a little bit of cushion in case the market softens again.”
Leh added that fixed rate mortgages have an advantage over variable rate.
“The Fed can change its mind. It can change very quickly. Fixing in your rate for 5,7 10, 15 years makes a lot of sense,” he said.
For those who are already homeowners and are looking to refinance during this time, Saltos explained banks can do a portfolio remodification. For those with an existing loan, she encourages them to discuss what they’d qualify for and what their interest rate would look like.
“That usually is a very quick and easy way to adjust your rate without having to submit a full financial package and go through a full underwriting,” Saltos said. “There would be a fee to do that at the bank, but that's a really easy call that can help you evaluate what your decisions are. There may be a little cushion for refinances because it is such an active market right now. If you are lowly levered on your property, 70% or less, and are looking for some liquidity reserves, you could look into putting a home equity line of credit behind your mortgage, and typically your existing bank will do that. That would give you access to a resource for liquidity or cash, should you need it for whatever reason. Calling your bankers and accountants to have those discussions I think is well worth your time because it could be significant savings.”
“At the end of the day, your goal is to get to the get to the end zone,” Leh added. “You want to make sure you have enough money so you can retire comfortably. Equities over the last 10, 20, 30, 50 years have done much better than bonds. It's our view that will continue so people should be willing to take more risk. But again, you get something that happened in March, and it scares you. Not only do you get scared because your portfolio value is down, but you're listening to pundits who are scaring you even more. So, it is critical to come up with an asset allocation that you are comfortable with for the next three to five years at a minimum. I think the most important thing, if you get anything out of this conference, is set your asset allocation to your risk tolerance so that you will not panic and get emotional and then you dollar cost average into the market."
Following the economic panel was the virtual networking cocktail party. Attendees got to select from four themed rooms, including Verve Wine, OurVodka, El Guapo Bitters, and tequila with Jena Ellenwood from Raines Law Room based in New York City. At the halfway mark, attendees had the option to jump into a new room or continue hanging out in their first.