Edward McDonald
Title: President, Salem Five Mortgage Co.
Age: 59
Experience: 36 years
Ed McDonald came into the mortgage business sideways. Out of college, he worked for a financial publishing company in Boston’s Fenway neighborhood, learning about the business from the outside in before he dove in headfirst at John Hancock Home Mortgage. Twenty years ago, he went for a job at Salem Five and was impressed by what he saw. He told Banker & Tradesman, “Other than Salem being an hour and a half from my house, it was exactly what I was looking for.”
Q: With more than three decades of experience, you must have seen a lot of ups and downs in the mortgage business.
A: You know, the last decade in the mortgage business has been phenomenal. The amount of growth that we’ve experienced has been unbelievable. I think when I bought my first house rates were 14, 15 percent and now they’re in the twos for a 15-year and the threes for a 30-year. I remember when they broke 10, they hit single digits, I couldn’t believe it. Now if it ever got near 10 again, people would think the world was in upheaval.
But the last decade really has been a strong decade in the mortgage industry. Rates have been on a downward trend, we had the fiasco in the mid-2000s, but it’s been pretty good for the last decade. And it’s as busy now as it’s been in my 30 years in this industry.
Q: What’s driving that, from your point of view?
A: It seems more than [low rates]. I’d love to thank our Realtor and builder partners out there because we’ve financed the purchase of more new and existing construction this year than at any time in our 160-year history, so the purchase market has been strong. I’m pretty optimistic. I always think it’s a good time to buy a home, that’s the industry I’m in, but it [really is] a great time to buy a home. Rates are what they are and that gives you plenty of buying power. And it’s a phenomenal time to sell a home. The inventory is low, so if you want to sell your home, it’s the time to do it. We kind of have that balance where it’s still a good time to buy a home, even if the sellers are a little bit pricey, so you have a lot of purchasing power right now with rates where they are.
Q: You mentioned low inventory – does that concern you at all?
A: It’s funny. I recently gave a presentation to my board of directors, and I do get that question a lot: why is inventory so low? We’ve had a phenomenal second quarter. It was the most unbelievable quarter from – again, financing the purchase of new and existing construction that I’ve ever seen. If more people are buying homes and most people are selling a home to buy a home, where are all those homes?
Well, it’s kind of obvious when you really get under the hood, but the first-time buyers are coming into the market and they don’t have a house to sell, so they’re driving home sales up but it’s keeping inventory low. If that trend continues for the next couple years, which we anticipate, we think it’s going to be a boom time for mortgages.
We cater to the first-time buyer, whether it’s an FHA or it’s the Fannie Mae programs that are out there now or MassHousing. We think about that first-time buyer and everything we talk about with the Millennial generation who’s buying, and supposedly 25 percent of the first-time homebuying population is going to be Millennials. We’ve got a tremendous product line and a lot of people dedicated to that marketplace. … To move our buyers, who want to buy their bigger home, they need the first-time buyers.
Q: How would you characterize the bulk of business you’ve been doing this year?
A: I think there’s a lot of people, especially my age, who are downsizing. They’re selling the family home, the kids have graduated from college, and they’re selling the home in suburbia. Look at Boston now. There’s a lot of people looking to move back from suburbia into the city.
The purchase market was up about 42 percent for us. I think nationwide it’s up 5 percent. And the first-time buyer population was up 20 percent nationally. For most of the year we had about 60/40 purchases to refis, but right now it’s probably more like 50/50. After the UK pulled out of the European Union, rates dropped and we had a spur of refinances. It looks like we’ve got a bit of a refinance market right now.
That second quarter was really strong. I’ve never seen anything like that in my 30 years in the industry. I’ve never seen it that strong.
McDonald’s Top Five Memories Of Raising His Family In Foxboro
- St. Mary’s Church – “Where my wife and I got married 35 years ago.”
- Founder’s Day Parade – “It’s phenomenal.”
- Taylor Elementary School – “I’ve got to give them a plug. [My sons] couldn’t have had a better start.”
- The waitresses at the 99 – “Anything to do with customer service has to come back to the waitresses at the 99.”
- Patriots games on Sundays.
