MBS Highway's Barry Habib on why 2025 will be a unique year

December 19, 2024 5:00 AM

The mortgage lending business has been fighting an uphill battle, but Barry Habib, the founder and chief executive of MBS Highway, sees reasons for optimism.

The industry, which has been contending with finding borrowers in a pricey market short on refinancing incentives, could get some rate relief next year, according to Habib.

His prognostications are worth noting because, while not infallible, Habib has received multiple awards for accurate forecasting over time.

Barry Habib speaks at an industry event. — Barry Habib

Those who know and work with Habib say that accuracy and influence stems from an ability to apply an abundance of curiosity into learning about any specialized topic, from mortgage rates to medicine or movies, and then passing on the information to others.

"Since I've joined him at MBS Highway, I've gained more insight than in all my years of formal education combined," said Diana Bajramovic, a vice president at parent company Highway.

Habib's interest in the nuances of the capital markets is unusual for a mortgage professional that Cynthia Ertman, CEO and founder of industry coaching firm The Defining Difference, said is "a sales guy at heart."

"I think he's just done a masterful job of being able to break it down in a way where, you know, the mid-tier loan officer can really understand what he's saying, and provide LOs with the ability to really educate their client base," she said.

It's something Habib enjoys doing so much that he has only partially scaled back his work doing it as he balances his business life with a pressing personal crisis.

"Despite facing a challenging health battle, he has continued to show remarkable courage and unwavering commitment to supporting others in the mortgage and real estate industry," said his son, Dan Habib, Highway's chief revenue officer.

Barry Habib's attention to detail and obsession with deconstructing technical subjects could help in terms of both struggles, said Tim Braheem, CEO of industry coaching firm Performance Experts.

"He's continually taking on intimidating subjects, like the way that mortgage-backed securities are traded," said Tim Braheem, CEO of Performance Experts. "Now with everything that he's going through in his personal life, he's very well versed in cancer research."

In a wide-ranging, frank conversation earlier this month, Habib shared some of his insights into both topics and what he foresees them as meaning for him and the business. He also reflected on his unique place in the industry and some of the twists, turns and forks in road that led him there.

His comments from that conversation, which took place Dec. 6, have been condensed and edited for clarity.

The forecast for 2025

I think that it'll be a better year than people expect. Interest rates should be a little bit more friendly.

I believe that there will be more cuts to come in 2025. Perhaps somewhere between 75 to 125 basis points. That should help the 10-year Treasury yield to decline to somewhere around 3.6%. Mortgage rates on 30-year fixed rate loans are currently running about two and a half above that and should be about two and a quarter or so above that next year. So I think we'll see rates in the five and three quarter or five and seven eighths range. I could always be wrong, but I think this is a reasonable baseline with some variance depending on future news.

I think inflation will be a little stickier, but there will be progress. I do not believe that the numbers that we're seeing in the job market are anywhere near indicative of the underlying weaknesses that are there. I think that will eventually cause the Fed to be more aggressive. Mortgage-backed securities and the overall bond market will be more favorable to lenders as a result. So I think the rates could even be below the five and three quarters mark next year.

I've won Crystal Ball awards for accurate housing forecasts three times in recent years from Pulsenomics in conjunction with Zillow and Fannie Mae. It leads me to believe our modeling has a lot of merit to it. I've also attributed those awards to the fact that being a professional speaker and traveling gives me a feel for different markets around the country.

Where it all started

My career in the mortgage industry started back in 1986. At one point, I was recognized by [former NMN affiliate] Broker magazine as the top originator in the country. Then I had this idea to help mortgage professionals understand the financial markets and I thought it could be a good opportunity.

I was always interested in the capital markets and there are also two individuals that I thank for developing that. It was a big deal that somebody would take me under their wing to teach me. My parents were immigrants who didn't speak English and were very poor. My dad passed away when I was a young boy, so my mom worked in a sweat shop making dresses. I didn't have the benefit of the kind of mentorship some other kids do.

A man named Jack gave my first introduction into technical analysis. He was somebody I talked to about stocks. Once I learned that you can have some pretty reliable predictions based on technical analysis, I devoured everything I could. Jack also taught me how to think big.

Then I met the gentleman who brought Eastern technicals to the United States, Steve Nison. I attended one of his seminars, introduced myself, and told him of my interest. Between him and Jack, I became very adept at technical analysis.

I would do technical analysis on where interest rates were going, and started to email it out to my friends, saying things like, "This is something you should watch out for. I really think rates are going to get better, because the bond market looks to me like it is going on a roll here" or I'd tell them something relevant on the stock market.

In 2001, I started Mortgage Market Guide. I was watching all my friends in the business making money hand over fist and here I was with a startup, but I didn't like some of what I saw in the mortgage industry. So in 2006 and 2007, I started a certification and made that part of the Mortgage Market Guide. Then I sold the company. The sale closed in June 2007. I stayed on there for a few years because when the market got bad, the group that had purchased us just had a very difficult time. I thought that there were opportunities that they weren't seeing. I regrettably left back in 2010 and had a noncompete so I did some fun things.

Medical imaging, movies and a musical

I had a medical imaging business I started and sold. I had the opportunity to do some acting, and then produced a couple of shows. The biggest hits I had were Rock of Ages, and [magician and illusionist] Criss Angel, which I still have ties to and is in Vegas right now. I had some fun and blessings there. Eventually I was able to open the business that we have right now.

I also got a call one day from somebody who asked me if I wanted to be in a movie. It turned out to be a kids movie and more than anything, they liked my voice. So I played Colonel KaBoom in that movie and from there actually had speaking roles in 10 different other Hollywood films. In one comedy, I play a doctor. The guy who wrote it was Chris D'Arienzo and he also directed it. I try to always have a positive attitude and Chris took a liking to me. One day he says, "You're in the finance world and I've got this [theatrical stage] project, Rock of Ages. I want to give you the script. Tell me what you think of it." I love music, and so I was thrilled.

It was a good thing I didn't know anything about that world, because if I would have known how risky it would be to invest, I would have never done it. I got four other guys to do this with me. It became a big off-Broadway hit, and then we made a really crazy decision to take it on Broadway. I had to put a lot more money in then. At one point we didn't have enough for payroll, so I was fronting money to get this together. But it did become a big hit even though we were going through the financial crisis. People would come to the show and they'd be so happy. I met celebrities and I could get in any restaurant or any club I wanted to for a period of time. It was almost like I had the keys to the city.

A second chapter in mortgages

MBS Highway started around 2012. In 2020, I sold about two thirds of it. Also in 2020, some people in the mortgage industry give me credit for having to explain something to the Fed.

In 2021 and 2022, things started to change. We actually acquired ListReports, and it's been a great run with them. Also, I created a certification and another division called Home Report. We have all those under the Highway brand.

It's been a difficult market. Our revenue was growing like crazy, but over the past couple of years, it's been pretty flat, which is admirable compared to our peer group. We've been able to maintain pretty high renewal rates and flat revenue growth.

So that takes us to today. I've cut back on a lot of speaking. Now I can do it virtually. I still do a lot of speaking engagements, but not as many live. I only do probably around 20 events a year. It used to be 120.

On fighting cancer

I'm going through a difficult time health-wise right now. In February, I was diagnosed with cancer, and it's a very serious kind called B-cell Lymphoma. So starting in April, I went through a very difficult regimen of chemotherapy and made progress, but it didn't eradicate it. If you don't eradicate it, it just comes back. So Memorial Sloan-Kettering Cancer Center said, "We're going to do something called Car T," which is very interesting.

What they can do is take your T cells from your body, program them in a lab, and kind of antagonize them with a safe virus to teach them to kill what's harmful in the B cells. So when they infuse them back into me, that is supposed to kill the bad things in the B cells. So pray to God that it works.

Sometimes it doesn't know good B cells from your bad B cells. My normal immune system will be compromised for a while.

Leading up to this, I had radiation for 10 days in what they call bridging therapy. The radiation seems to have helped. This was the first bit of really good news I'd gotten in awhile. I also had three days of chemo that I had to do to deplete your lymphatic system and make room for the T cells.

The public saw me lose my hair over the summer because of the original round of chemo. It's just looking like it used to, but because of the chemo I probably will lose it again. If it works, it's a small price to pay. Meanwhile, every day I thank God for this dream life that I've had.