Originators cannot afford to play the interest rate waiting game

Record-high home prices and elevated interest rates have weighed down mortgage markets. The Federal Reserve signaled its intention to maintain higher-for-longer rates, confirming that a reprieve is not on the horizon for borrowers and originators alike. Recent stagnation in refinancing loans, coupled with supply and demand discrepancies in housing, means originators still find themselves in an increasingly competitive landscape despite having expectations of the worst being over. These market developments underscore the reality we must face: Playing the interest rate waiting game is not a viable strategy. Instead, originators must aggressively seek out innovative ways to serve borrowers and generate business in this challenging market.

Meet your clients where they are

Because originators’ loan activity has decreased significantly, it’s imperative that you incorporate new products and services in order to grow your business and meet borrowers’ needs in the current market.

Housing sales have slowed due to waning supply and record-high prices.  However, a record $17 trillion of home equity is still available in the market. The bottom line: People are staying put. So how can you leverage this massive amount of equity? Explore HELOCs, which come in all shapes and sizes, meaning you can tailor them to your client base. For example, bank statement HELOCs serve self-employed borrowers, who might not qualify for traditional products. Bank statement HELOCs offer borrowers the flexibility to fund the endeavors that matter most to them, such as business ventures, home renovations, and other expenses.  

Furthermore, elevated interest rates have made it more difficult for borrowers to obtain personal loans. That’s where HELOCs come in: By offering bank statement HELOCs, originators can provide a valuable service that meets borrowers’ current needs while expanding originators’ own businesses through broadened product offerings.

In addition to HELOCs, flexible non-agency loans, such as non-QM loans, can help originators serve a greater range of borrowers. These loans are particularly beneficial for the growing number of self-employed borrowers who might not meet traditional criteria for mortgage qualification. 

By growing your experience with and expertise in niche products such as HELOCs and non-agency loans, you will hold a competitive advantage over your peers that stick to offering only conventional loan products.

Be proactive to stay ahead

Offering innovative products to your clients isn’t only for their benefit; it’s an investment in your own growth too. The time that originators spend becoming an expert in niche products enables them to offer tailored solutions to more diverse borrowers, expanding the potential reach of their practices and opening the door to long-term business growth. Keeping a finger on the pulse of borrower behaviors and motivations allows originators to anticipate their clients’ needs and stay ahead of market challenges. 

Continuous education on products is crucial for originators, and those that don’t make a proactive effort to increase and improve their knowledge are at a disadvantage when it comes to delivering on their clients’ needs and standing out among industry peers. Originators must seek out webinars, workshops, and training that enhance their understanding of new and developing product offerings, ongoing market trends, and industry best practices. Looking beyond their own education, originators must also be prepared to educate clients on the benefits of different loan products and how certain mortgage innovations could be applied to help them achieve their goals. Educated borrowers are likely to be confident in their financial choices, offer business referrals, and establish trusting relationships with their originators. 

By remaining flexible and innovative, originators can thrive even in a challenging interest rate environment. Remember to focus on delivering value to borrowers and to proactively seek out new opportunities. No matter what the market is like, you can turn industry innovation into a growth opportunity for your business.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

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