Five Questions With: Nicholas Caccia

Nicholas Caccia, a licensed loan officer at First Home Mortgage in Providence, talks with Providence Business News about the recent rate increase at the Federal Reserve.
Nicholas Caccia, a licensed loan officer at First Home Mortgage in Providence, talks with Providence Business News about the recent rate increase at the Federal Reserve.

Nicholas Caccia is a licensed loan officer at First Home Mortgage in Providence.
He’s licensed in both Rhode Island and Massachusetts and has in-depth knowledge about the regional market. Caccia talks with Providence Business News about the recent rate increase at the Federal Reserve, which marks the first move away from easy money policies guiding the lending market in the United States since the financial crisis of 2008.
Caccia talks about how the increase should affect the local housing market, mortgage rates and his industry overall.

PBN: How closely did you watch the Fed and the decision to lift interest rates this month?
CACCIA:
The whole industry – we were all watching the Fed. We knew it was going to come based on what they were saying, but we were focused on the language. The day it happened, I watched it pretty closely all day, so it wasn’t that big of a shock when the rates rose and it had already factored into the market. But it’s definitely a turning point from where we were before.

PBN: What happens next?
CACCIA:
There will be more increases over time. I think probably by the end of 2016, rates might be up to about 1 percent. Right now, they are at about a quarter percentage point. That’s what the Fed is offering. So you’re going to see a gradual increase of all rates. It won’t swing down, like we’ve had over the last four years, where [mortgage] rates have dropped to the low to mid 3 percent rate. Where the rates were zero before at the Fed, I think those are going to be a thing of the past.

PBN: What do you think would be a comfortable benchmark range for the industry?
CACCIA:
Everyone adapts, but for the next six months I see the rates in the 4.5 to 5 percent range. They are a little bit lower than that right now because it’s Christmas and the markets don’t move that much this time a year, but once the spring market comes back the markets will move up and people will look to invest their money. I think the 4 and a half to 5 [percent] range will be the new normal.

PBN: Do you think people who’ve pushed off refinancing their mortgages will try to take advantage of the low rates while they last?
CACCIA:
Yes. I believe so. I’ve seen more people come in and ask about refinances in the last month than [each of] the last 12 months. It’s been busier this last month and it’s usually completely dead because people are more focused on the holidays. But up until the Fed meeting, we saw an uptick in business. People will always want to refinance, but if we’re going to a higher rate there will be more people looking to get it done if they haven’t already.

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PBN: What does this all mean for the mortgage industry moving forward?
CACCIA:
For the overall economy it’s good. It means we’re making progress. It means the Fed thinks people are making more money and less people are unemployed. For our industry, every time rates go up, we see a little downturn in business, but at the end of the day, everything becomes normalized. If you want to buy a house, you’re going to buy a house. It will [also] get people out and make them a little more serious if they are on the fence right now about buying a house. For the refinance market, it’s not great. As a loan officer, you want to get the best rate, but if the lowest rate of that day is 5 percent, that’s the rate, there’s nothing you can do about it. I think we could still have 15-year loans in the 3 percent range, but 30-year fixed-rate loans aren’t going to be in the 3 percent [range] anymore, unless there’s a downturn. The normalization is going to be in the 4s and increasing as the economy gets better and better. You can’t predict everything, but that’s the trend based on the last 30-year cycle of the economy.

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