56 SEAMAGAZINE.COM MAY 2017
Sea: What is the lending climate like right now? Better than fi ve or six
years ago? The same?
Bill Otto: There’s no question it’s better. Five years ago (2012), it was just at
the point that we were starting to come out of the abyss that started, in reality,
in 2007 but really got noticed in 2008. It’s been steadily getting better since,
especially on the retail side. There are more lenders, and interest rates have
been pretty level. We’ve had, as an industry, the best kind of growth, which
is slow and steady. The industry got rid of the low-hanging fruit in distressed
inventory (repos) from those 2008–’11 days, and as a result used-boat values are
less depressed. It’s really all pretty good. Again, it’s happened the way you want
to see it grow, slow and steady. Of course, it’s never right for everybody, and
there are those who wish it was better instantly, but we’ve learned through the
years that instant gratifi cation doesn’t last long. I think it’s all positive. Could it
be better? You bet, but it could be a lot worse.What factors are contributing to the
improved state of lending?
There are more lenders in the
market, our applicants are stronger
now than they were during the
downturn and it’s a better market. The
economy is moving forward and people
feel better about themselves, and when
people feel better about themselves,
then things that are classifi ed in some
cases as toys [come back into the
picture]. When you’re just trying to
keep the wolf away from the door, you
don’t think about those toys so much.What are you seeing with interest
rates?
Interest rates are stable, there’s
no question about that. Having said
that, the fed is supposed to raise it
a quarter of a point this afternoon,
but in light of the fact that we haven’t
had an increase this year, I don’t seeit as a big deal at all. There’s no question
that other increases are coming, but it’s
not bad. Interest rates in boat lending
haven’t dictated in the last 10 years whether
anyone bought a boat or not, and I don’t
think the increases we’re going to see in
2017 are going to bother anything. They
might even get some people off the fence. If
you’re considering purchasing a boat, you’re
probably getting the urge now with winter
ending, and if you’re thinking rates in July
or August are going to be a quarter or half a
point higher than today, maybe you’ll make
the move today if you’re going to fi nance it.
Why pay any more in 90 days?Is there a range you’ve seen in the last
12 months? What’s the best rate? The
average rate?
There’s a lot that goes into that. If you’re
talking about fi xed rates for up to 20 years,
it’s been in the fours — once in a while 3.99
or 3.75. If you are super qualifi ed — have
one-third or more down, your credit score
is 830, can handle a shorter term and
you’re liquid — sometimes you can do
better than the general population, but
not a lot. There are other deals where with
pricing on LIBOR with rate locks in incre-
ments of 30 days you can get down lower.
However, fi xed rates are so close to variable
rates, why take the chance? Even if it’s
going to save you 1½ percent, do you want
to take the risk when you could be paying
2 percent higher in a year? When variable
rates move, they can move fast. History has
taught us that knowing what you’ve got is a
comfortable place to be.BILL OTTO
is the cofounder of the National Marine Lenders Association, an organization that got started in
1979 and has represented marine lenders’ — and borrowers’ — interests since. He’s now the director
emeritus and treasurer of NMLA (nmla.org). Prior to that he was the head of the boat lending division
of one of the bigger banks in Michigan. Now, he owns Lake Effect Financial Services, a Grandville,
Mich.-based company he founded in 2008, and is the Great Lakes agent for Just Boat Loans
(justboatloans.com) in Annapolis, Md. All told, he’s been in the marine lending space since 1969.
He might know a thing or two.
Read on to fi nd out more.History has
taught us
that knowing
what you’ve
got is a
comfortable
place to be.GETTIN’ BETTER