With the mortgage industry still rightsizing, mortgage professionals are concerned about deregulation of the industry and inflation that erodes already small margins. Industry players are largely pessimistic about the economic environment and expect interest rates to rise in the near future. HousingWire Q2 2023 LenderPulse Survey.
Nearly 30% of the 155 respondents to the LenderPulse survey pointed to increased regulation, rising interest rates and inflation as the biggest challenges over the next three months, out of a total of 11 options that included lender stability, underwriting issues and product competitiveness . Offering.
About 19.4% of mortgage professionals surveyed said that falling loans was the biggest challenge, ranking as the second most challenging factor. Lead generation ranked as the third biggest barrier at 15.5% and staying motivated at 14.2% ranked fourth.
Other challenges chosen by mortgage professionals were relationships with real estate agents, at 8.4%; the competitiveness of the rate sheet and underwriting problems at 5.8%; Lender Stability at 3.9%; Product offering competitiveness at 1.9%. None of the mortgage professionals surveyed said that staff reductions reduced their ability to close loans and lack of training were challenges they faced.
LenderPulse solicits surveys from over 24,000 mortgage professionals nationwide on market trends and lender opportunities and challenges. Of the 155 completed surveys, 32.3% of respondents were from the Southwest, 21.3% from the Midwest, 16.8% from the Northeast, and 14.8% from the Northwest and Southeast. The RealTrends LenderPulse is a forward-looking quarterly survey. The survey was conducted between February 27 and April 3.
Economic and Housing Market Outlook
among federal ReserveIn an effort to tame inflation, 44.5% of mortgage professionals surveyed expressed pessimism about the economy over the next three months. Of the total, 36.1% were neutral and 19.4% were optimistic.
Mortgage professionals’ pessimism about the economy stems from expectations for interest rates to trend higher in the near term.
Around 47.1% respondents said rates are likely to go up in the next three months, 30.1% of the survey participants said rates would remain stable while 22% said rates would move downwards.
A total of 45% of participants said home sales in their markets would remain flat for the next three months; 30.3% said sales would increase by more than 5%; and 25.2% expect sales to decline by more than 5%
in the latest report of National Association of Realtors (NAR), existing home sales grew 14.5% in the month of February for the first time after a 12-month decline.
market incentives
In high-rate environments, floating rate mortgages funded by sellers, lenders or builders were widely introduced as an incentive for buyers.
A majority of the 155 respondents – nearly 70% of the total – said the seller, builder or lender funded floating rate offers offered to buyers as an incentive.
“Sellers are making entertaining offers with rate buydowns and concessions to sell their properties as this market continues,” said a loan originator in California.
In a high-rate environment, lenders call the floating rate buyout a win-win strategy for both sellers and buyers when used appropriately.
For example, a 2-1 buydown may be paid for by the homebuyer or the home seller may pay for it as a seller discount. That payment can be made in the form of mortgage points or as a lump sum deposited into an escrow account with the lender and used to subsidize the borrower’s reduced monthly payments.
“As it pertains to buydowns and or seller funded buydowns, in my opinion and from my perspective I think this product is really only viable and something that makes sense for the borrower if the buydown seller or builder funded by,” said an operations manager based in California. “This is essentially free money that will be credited back to the borrower should they pay off the loan within the purchase structure (1/0, 2/1, or 3/2/1).”
Seller credits for closing costs, price reductions in waiver of fees, and adjustable-rate mortgages (ARMs) were also cited by mortgage professionals as incentives offered to the market.
A mortgage broker in Arizona said, “2/1 buyout used to be working great, but now the market has tightened due to the lack of supply of homes, so many sellers have stopped offering or accepting it.” have done.”
“Borrowers choose ARM more often than fixed rate for a more competitive rate. Many are curious about buydowns, but we currently operate in a seller’s market, so we don’t see many seller-funded buydowns. Have been,” said a loan officer in Boston.
pivot to a purchase mortgage market
In a purchase mortgage-focused market, getting referrals from real estate agents is key to landing business.
Staying in touch with Realtors periodically, forming new relationships at open houses and setting up in-person meetings are how mortgage professionals strengthened relationships with Realtors, according to the submitted written responses.
“Volunteering with our local Board of Realtors on three (3) committees; Education, Banking & Finance and Membership Engagement. Looking to build relationships that I can turn into referrals down the road once they realize how organized I am, how smart I am and I am a relationship lender at a local community bank! noted a loan officer in Washington.
Sharing leads and sending out newsletters are ways loan officers try to differentiate themselves in a highly competitive industry.
“Actively engaging with them, monthly lending newsletter, training opportunities [is how we strengthen relationships with Realtors]an executive of a regional bank in Michigan said in a written response.
“Our goal is to strengthen our Realtor partners relative to their competitors. To do this, we’re holding skills and knowledge classes and holding one-on-one meetings to share best practices,” says a Texas-based the loan officer said.
if you have questions LendingPulse E-mail actual trend Editorial Director Tracey Welt [email protected], Plus, be sure to sign up for the new Data Digest newsletter, a weekly breakdown of news, tips, and strategies for success.
