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The Future of the Mortgage Industry—How to Future-Proof Your Mortgage Business in 2024
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Shape Software
In 2017, Forrester analyst, Andy Hoar famously declared,“we believe one million [sales] jobs will be net displaced by 2020.” No one could have predicted what enveloped the globe that year, nor the economic downturn that swiftly followed. By extension, the meteoric rise of artificial intelligence took all industries by surprise.
Last year, the investment banking giant, Goldman Sachs estimated 300 million jobs will be lost or displaced by AI. Moreover, in May 2023, AI was responsible for 4000 job losses, around 5% of all jobs lost, and the seventh-highest contributor to employment losses.
But what does this mean for real estate agents, mortgage professionals, and the average borrower?
Key mortgage industry statistics for 2024
The mortgage industry is witnessing a dynamic shift, characterized by fluctuating interest rates and evolving market challenges. To give you a clearer picture, let's break down some pivotal trends and forecasts that are shaping the mortgage landscape this year:
- 1. The average interest rate for a 30-year fixed-rate mortgage varied between 6.09% and 7.79%, with a 52-week average rate of 6.81% in the previous year.
- 2. Lawrence Yun, the Chief Economist for the National Association of Realtors, anticipates that mortgage rates will hover around the 6% to 7% range in the upcoming year.
- 3. Home prices increased by an average of 5.5% between the third quarters of 2022 and 2023, according to the Federal Housing Finance Agency (FHFA)
- 4. Industry experts, including those from Freddie Mac, predict a continued increase in home prices, albeit at a slower pace of about 2.6%. The housing inventory is expected to remain limited, but there is potential relief from new construction homes.
- 5. The average credit score in America is 714.
- 6. The Mortgage Bankers Association (MBA) predict mortgage originations to increase by 19% to $1.95 Trillion in 2024. They also highlighted the challenges faced during this period, including high median purchase and interest payments, scarce inventory of for-sale homes, especially at the entry-level, and a constraint in credit availability.
How 2023 shaped the US housing industry
In 2023, the U.S. housing market experienced a slowdown following a period of intense growth during the coronavirus pandemic. This earlier growth phase saw numerous buyers taking advantage of low mortgage rates to renegotiate their loans, purchase new homes, or achieve homeownership for the first time. High demand during this period propelled home prices to double-digit increases for two consecutive years. This intense competition, often termed the “race for space,” led to nearly 60 percent of homes being sold above their listing price in early 2021. However, the market has since cooled, with a nationwide decrease in home sales and similar trends across major metropolitan areas.
So, as we charge headlong into 2024, let's dive into how mortgage companies can stay ahead of the curve! We spoke to 9 industry experts about their advice for future-proofing your mortgage business.
Outsmart AI
Yep, a loan at your fingertips, zero lender required.
You know Frank Garay, right? – The mortgage industry influencer and co-founder of the National Real Estate Post is known for his no-holds-barred opinions on industry shifts.
For Frank, the biggest threat to lenders is that AI is currently being used by massive tech companies to originate loans from virtually any web/mobile-based platform.
Still, Frank’s not fazed.
“Use technology that helps you physically engage with referral partners (Realtors) by giving you a real reason to speak with them on a consistent basis asking them for the business. Not technology designed to ensure you don’t need to engage with them physically. As street level originators we need to move away from ‘automated’ engagement platforms and embrace platforms that trigger us to physically engage with referral partners so we can ask for the referral,” he advises.
If you don’t already have one, make sure you set up a simple referral partner touch campaign in your CRM to help you stay connected to the real, human people who send the best leads your way.
Stop treating each deal as transactional
Alex Jimenez is Branch Manager at Benchmark Home Loans. He’s also incredibly tuned into the changes taking place in the mortgage industry.
You have to stay in front of your clients, or someone else will.
“Lenders need to stop treating each deal as transactional. They need to build a solid foundation with their client and understand their needs. They need to go above and beyond to provide their client top notch service from the inception of the relationship to beyond the closing. Consistent communication, touches and follow up are all important factors of this. You have to stay in front of your clients, or someone else will,” Alex warns.
He’s not wrong.
In fact, research shows that 79% of leads never convert into sales, usually due to a lack of lead nurturing. But that doesn’t mean you need to run in every direction to stay in front of your clients and prospects.
“Lenders tend to create their own threats. They get focused on what other people are doing and get out of their lane. Lenders need to focus on themselves and what provides them consistent business. What creates that is dependent on the market place, the types of loans they are doing and what impact they have had locally,” explains Alex.
Resist the urge to spread yourself thin. Instead, set up a smart CRM to concentrate your efforts on optimizing and converting your best leads.
Embrace technology ASAP
Shashank Shekhar is a #1 Best Selling Author, CEO of Inc 500 Company Arcus Lending, and a regular contributor here on the Shape blog.
According to him, technology is a mandatory part of every successful mortgage business.
Automation through digitization is the #1 biggest change every lender needs to prepare for
“Automation through digitization is the #1 biggest change every lender needs to prepare for. More than half of the work currently done by humans will be replaced by algorithms, tech tools, and bots in the next 24 months. To thrive, lenders need to embrace technology ASAP and also provide better than average education to borrowers via online and offline mediums,” Shashank predicts.
In fact, approximately 83% of Top Producers said digital mortgage technology is the key to their company’s future growth. But if you don’t count yourself within that majority, you should know that there are some benefits of being late to the party.
For example, choosing a CRM from within a more mature marketplace enables you to select a tool capable of running all your business tasks within one central system, rather than creating a bulky patchwork of platforms.
Work less
When we asked Eric Mitchell, Executive Vice President of National Retail for his thoughts on the future outlook for brokers, he had this to say:
“The biggest challenge facing Mortgage Lenders is getting their Loan Officers to adopt technology. Technology will not replace Loan Officers, and Loan Officers that adopt technology will replace those that don’t! The days of a Loan Officer making a good living closing 1 or 2 loans per month are over. And the only way Loan Officers can close higher volume without working 70+ hours per week, is to adopt technology at a faster pace.”
More business from less work? It’s true.
With the right use of the right tech, you can achieve the seemingly impossible. But you’ll need to pay extra close attention to ensure your daily tasks (fewer though they may be) actually move the needle on revenue. And you need to inspire your team to do the same. Here’s Eric:
“There are tremendous efficiencies that can be achieved that allow Loan Officers to be more valuable to their clients and also generate more business with less time. The companies that will survive this next market correction, will be those that inspire their Loan Officers to make the needed changes to their daily activities. The size of our paychecks are directly correlated to the level of value we bring to our clients. Stop complaining about the market and start learning how to be more valuable!”
You heard it here first, people.
If you want to make the most of the inevitable changes in the market, it’s time to start thinking bigger about the value you bring to the table.
Prove your value
Change is never easy. Most of the time you know what you need to do, you just need practical steps for how to do it.
We brought in Rajin Ramdeholl, Vice President Private Client Division at Meadowbrook Financial Mortgage Bankers Corp. for help on that one.
According to Rajin:
“The biggest change would be interest rates increasing and affordability decreasing. That coupled with a recession on the loom will be a tremendous challenge for those in the mortgage industry. During a recession people are scared to spend or can’t afford to buy a home. They can prove their value through social media videos or testimonials from prior clients. Or through online reviews,” he advises.
We know it’s getting tough out there. But for savvy lenders, there’s always a way to help lead your prospects and customers cut through the hype and fear, so they can find the right deal for them.
And nothing builds that level of trust like a little social proof. In fact, research shows that product reviews are 12X more trusted than product descriptions and sales copy.
If you don’t already have an automated system for collecting testimonials and reviews, make sure you get that set up in your CRM. Simply give your customer a heads-up that they’ll be asked for feedback and you’ll be amazed by how many will jump at the chance to share their experience.
Empower your team
Alright, by now you’ve probably realized you have some work to do to bring your business systems and strategies forward. But what about your team? We asked Christine Beckwith for help on this one.
Why? Well, because as a professional sales and life success coach, award-winning mortgage finance veteran and best selling author, she knows a thing or two about nailing the next level.
Here’s what she had to say:
“Lenders need to arm their employees with the tools to compete. Great service and competitive rates are the bare minimum needed. How do they help their Mortgage Loan Originators become experts in the many niche programs available and then position themselves to capture market share? Second, they need to advance technology wise as the movement on that front is beginning to take on a more rapid evolution. If they focus on those two things while servicing the consumer at the highest possible level they will stay alive,“ she predicts.
To recap, if you want to stick around in this crazy game of mortgage lending, you’ll need to have:
- A team of influential experts
- A tech-positive approach to running your business
Think of creative (and of course, tech-friendly) ways to elevate your team and don’t be afraid to experiment to find what works.
Refuse to become a commodity
John Thomas is the Branch Manager of Primary Residential Mortgage, Inc. and he also happens to be one of the The Most Connected Mortgage Professionals of 2018 according to National Mortgage Professional Magazine.
According to him, the competition is becoming fiercer than ever.
“I see the biggest challenge for lenders is big companies like Zillow and Amazon getting into mortgages and making it seem to the consumer that a mortgage is just like any other commodity like coffee,” he warns.
We know, scary. But when we asked John plainly whether the mortgage broker would one day become extinct, he basically said ‘no chance.’
“I would say that is not going to happen. People may start search online but most people want to make to talk to someone about the right loan product especially first time home buyers. There are even more loan options in the market now as we see Non-QM loans come into the market which certainly don’t fit into an online application,” says John.
Today, 66% of consumers say they’ll happily switch brands if they feel like a number, not an individual. And no matter how many mammoth-sized competitors enter the market, with the right tools, your team can offer a truly warm and personal experience customers just can’t get anywhere else.
Don’t forget how important this is
While we’re on the topic of personalization, it’s worth remembering that taking out a mortgage is a truly momentous occasion in your customer’s life—which makes your role downright crucial.
Here’s Tom Smith, Branch Manager at First Centennial Mortgage Corporation on taking a minute to walk in your customer’s shoes:
A mortgage is a big financial decision
“As companies such as Zillow, Realtor.com and Amazon are attempting to change the market as we know it for mortgage and real estate, the loan officer needs to show what an asset they are with the education and resources that they can provide face to face. Technology is great, but do you really want to put your information in the hands of a person that you can’t see or touch and works only 8-5 for the biggest investment of your life?”
Probably not. Find ways to show your customers you understand how important this decision is and are ready to be the one to help them find their way through it.
Communicate to compete
By now, it’s clear.
Though tech is evolving at lightning speed, customers are demanding a more human and personal experience with providers.
Anthony VanDyke knows the story well. The President of ALV Mortgage is a master originator and a total pro at using visual elements like video and screen captures to connect on a more meaningful level with customers.
Connect on a more meaningful level with customers
“The lending landscape is changing again. Big companies with big data are making it easier and improving the customers mortgage experience. We need to be aware of the customers experience and work towards making the mortgage process easier for the customer,” says Anthony.
When we asked him, ‘What’s the best way lenders can make the experience easier for the customer?’ He had just one word for us: Communication.
Let’s face it. For most people, navigating the mortgage application process is no walk in the park. What can you do to make it as simple and seamless as possible? Start by asking your customers about their experiences working with you to identify the friction points and come up with better ways to walk them through it.
Don’t give in to the pressure
John Stevens is a true mortgage industry leader
The immediate past president for The National Association of Mortgage Brokers has been in the game for decades. And suffice to say, he’s heard his fair share of buzzwords.
To him, the biggest challenge facing lenders is the “pressure to be less personable and more digital.”
“In today’s ever-changing environment the successful lender is the one who has trained their staff with a superior customer service experience. This should not be just a buzzword that lenders have in their company recruiting brochures, it should be a way of life. People want to work with people. And people will remember, and refer, the ones who treated them with respect and kindness,” explains John.
Sometimes the best thing to do is simply go back to basics. Because while the tools and technology will always change, but the human being still wants what it wants. Use smart systems to fuel that connection, and you’ll have a long and healthy future ahead of you.