InsightsAdapting to market changes with strong partners

Lenders can be strengthening their scalability in anticipation of adapting to market changes on the horizon | ServiceLink

By Jim Gladden, senior vice president, origination strategy

Toward the end of 2023, many in the mortgage industry took a “Survive Until ’25” stance. The average 30-year fixed rate hit a 23-year high of 7.79% in late October, purchase applications were down nearly 12% year-over-year, and existing home sales ultimately sank to a nearly 30-year low, declining 18.7% from 2022. In short, it didn’t seem like there was much for lenders to look forward to in terms of growth opportunities in the first mortgage space.

But it's a new day. Now well into the second quarter, the 30-year fixed mortgage rate has come down a bit, hovering around 7%, and the nation is closely watching the Federal Reserve Bank for indications of its next move. Potential borrowers who have been hesitating to enter the market are eagerly waiting for the right time to do so.

In fact, home buying and refinancing intentions have been documented in the recently released 2024 ServiceLink State of Homebuying Market Report. The report, which presents data collected through a survey of 1,519 consumers who either purchased or tried to purchase a home within the past four years, reveals that 47% of survey respondents plan to purchase a home in 2024. On the refinance side, 57% said they are either “likely” or “somewhat likely” to refinance this year.

Here's where lenders can “Do More in ’24”: While homeowners and potential buyers continue to watch the market for their ideal moment of entry, lenders can be strengthening their scalability in anticipation of adapting to market changes on the horizon. Mortgage lender scalability will be key to success in late 2024 and beyond.

Prepare to scale through innovations in mortgage lending

If you’re a lender, you know how important it is to be in a position of competitive strength when the market upswing takes hold. As interest rates drop and customers come clamoring, you want to be the mortgage provider that can meet their needs for ease and convenience, and get them to the closing table fast.

Innovations in mortgage lending, including scaling technology, will help, as will working with tech-savvy partners with deep experience in all aspects of mortgage lending. Your own agility in serving customers’ varied needs depends on how completely your partners, processes and technology can support you through volume ebbs and flows.

This is a good time to check in with your vendors to make sure you fully understand their scope and capabilities. Are they prepared to help you scale? Look for the following in what they offer:

A national footprint. Your vendor team should be familiar with the regulations and requirements of every state and county so you can support every borrower, no matter where their property is located.

A large, flexible team. When business is strong, you need your vendor partner to be able to reallocate human resources — quickly and seamlessly — to support you. They should have a staffing strategy that includes a steady influx of talent plus training, cross-training and continuing education programs that ensure you have access to skilled, knowledgeable people whether you’re ramping up or pivoting in response to shifting demand.

Reliable third-party vendors waiting in the wings. Your partner should have their own trusted partners in place — local field service contractors, notaries, appraisers, inspectors, title abstractors, etc. — to help you meet growing market demands.

State-of-the-art reporting capabilities. You need to know where your business has been, and where it’s heading, at any given moment. Look for robust dashboard reporting that helps you track daily, weekly and monthly order trends, as well as other pertinent information. This reporting information should also be used by your partners to assign your orders to the most qualified vendors.

Connection to regulatory changes. The regulatory environment changes frequently and innovations in areas like appraisal modernization can impact origination timelines. Look for a partner that is in close contact with the GSEs and prepared to participate in their latest programs.

A commitment to technology investment. It’s your technology partner’s responsibility to keep you updated on the latest available technology so that you can leverage it to your greatest benefit.

Plug-and-play technology. It should be easy to leverage your partner’s technological innovations. Look for enhancements that can be easily implemented to increase your efficiency, without requiring extensive training or resource allocation.

Collaborating with your vendor partners should provide you with the reach, expertise, technology and confidence you need to scale as mortgage industry trends move toward accelerating activity and business.

Also read: Doing more in ‘24, part 2: Preparing for market changes with process improvements

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