How mortgage lenders prepare for the end of the refi boom


While most mortgage executives still view direct consumer lenders like Rocket Mortgage as their biggest competitor, mortgage brokers are seen as increasingly worthy rivals.

As the refinancing boom fades away, mortgage lenders say their top strategies to attract more home buyers will be to improve their lending process, hire more loan officers, and partner with builders and real estate agents.

That’s according to Fannie Mae’s poll of 250 mortgage executives at 225 small, medium and large banks, mortgage banks and credit unions.

A quarterly lender sentiment survey conducted May 4-17 found that while most mortgage executives still face lenders such as Rocket mortgage Mortgage brokers, their biggest competitor, are becoming more and more worthy rivals.

And while two years ago creating better technologies for the consumer was a top business priority, streamlining business processes is now the biggest challenge.

Preparing for the transition to buying a mortgage

Mortgage Refinancing Expected will drop 49 percent next year, attracting home buyers will be more important than ever for mortgage lenders.

Improving the mortgage issuance process is seen as the best way to do this, with 52 percent of mortgage executives citing this as their first or second most important strategy to prepare for the transition to the heavier buy-in mortgage market.

Source: Fannie Mae Mortgage Sentiment Survey

Expanding your company’s presence by hiring more loan officers or opening more retail outlets was the second most popular strategy, cited by 28% of executives surveyed.

Nearly one in four (23%) mortgage executives said building partnerships with house builders or real estate agents would be an important strategy, while less than one in five (17 percent) said they would compete on price.

Mortgage brokers offering tougher competition

When asked who they see as their two biggest competitors in the next five years, 63 percent of mortgage executives chose online lenders who reach out to consumers directly. This is less than 68 percent from two years earlier, and may reflect the fact that while online lenders have had thriving businesses with refinancing homeowners, they have had a harder time reaching out to home buyers.

Online real estate services such as Zillow and Redfin are also seen as less fierce competition than two years ago, when 27 percent of mortgage executives expected them to be their largest or second largest competitor. Today, only 21% consider online real estate services to be one of their most serious competitors.

With local connections to potential home buyers, mortgage brokers are increasingly viewed as top competitors. More than one in three mortgage executives (34 percent) named mortgage brokers as one of their two top competitors, up from 24 percent in 2019.

Top business priorities

In 2019, 41% of mortgage executives said building better, consumer-centric technologies was one of their top two business priorities. But consumer-centric technologies are becoming less and less priority, yielding optimization of business processes and talent management and leadership in the latest survey.

Source: Fannie Mae Mortgage Sentiment Survey

“2020 has been a difficult year to innovate and improve,” due to the large volume of loans, said a senior executive at a larger institution. “We need to continue to implement technology and process improvements to improve the efficiency of the entire organization.”

The executive of a smaller lender said talent management and leadership are top priorities because: “We have staffing problems in the mortgage business. Turnover is a problem. It is very difficult to find experienced people. “

Email Matt Carter

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