How loan officers are dealing with surging rates and record-low inventory
The combination of an economic uncertainty, high mortgage rates and persisting affordability challenges will further reduce purchase demand
LOs are having to work harder and get creative to overcome the double whammy of surging rates and a lack of inventory
In a smaller origination market, LOs are looking to expand their market share among people who are still looking to move – whether it be for new jobs, marriage, or growing families.
In contrast to when rates were in the 3% levels and refis were easy business, LOs are now having to handle more challenging cases.
“It really felt like there were a lot of deals that were first-time homebuyers,” said Don Monson, branch manager at Sente Mortgage. “A lot of them were lower price homes or hard deals. I see a lot more low credit scores, funky income, foreign nationals or bank statement loans,” he said.
Buyers are now used to rates in the 6% levels and understand that the days of 3%-range mortgage rates are gone, at least for an unforeseeable period, LOs said.
This means LOs need to find ways to ease the financing pain for borrowers on a case-by-case basis.
Most loan officers don’t see the point of their clients buying down rates by paying a lot of money upfront. If mortgage rates drop over the next 12 to 24 months and there’s an opportunity to refinance for borrowers, buying down a point will be sunk cost.
Temporary rate buydowns have become available among a majority of lenders starting in the summer.
For borrowers who don’t plan to own the property long term, adjustable rate mortgages (ARMs) could be an affordable option.
The Stratmor Group estimates that about 440,000 to 450,000 people were employed in 2021 when the mortgage market was at its peak. There’s an excess of some 150,000 people compared to pre-pandemic levels, Stratmor estimated.
“People who haven’t caught up with the idea that it’s a different market and I have to work like a rookie, they’re not catching up as fast,” Monson said. “Sometimes it comes down to ‘do you have enough good resources?'”
Layoffs and employees exiting the industry is gloomy news, but for those loan officers who focused on cultivating relationships with their referral partners, they’re confident that the rightsizing of the industry will help them get back to pre-pandemic sales numbers.