Home sales and prices are expected to pick up pace in the year ahead – and there's plenty mortgage professionals can do to prepare, according to a Michigan-based broker
A mortgage market boom for 2025 may not be on the way, but hopes are high that falling interest rates and pent-up demand will contribute to a brisker pace of activity than seen in recent years.
A mild downturn in rates is expected to boost interest in refinancing, while the National Association of Realtors (NAR) believes home sales will tick higher as borrowing costs continue to moderate in the year ahead.
As the mortgage industry prepares to click into gear in January, brokers and loan officers are mapping out their plans for the year ahead – and confronting the question of where to focus their attention to bring in business and eke out growth for 2025.
For Samantha Shelton (pictured top), founder at Align Lending, casting the net as wide as possible will be a crucial strategy for the next 12 months, particularly as further Federal Reserve interest rate cuts loom into view for the year ahead.
That prospect could mean a more favorable economic climate for borrowers in 2025 and an opportunity for brokers to attract business that might have been out of reach last year. “Brokers are really great at finding products that are outside the box and coloring outside the lines, which our typical counterparts in retail don’t have the opportunity to do,” Shelton told Mortgage Professional America.
“[For them] it’s more of a one-size-fits-all and if a borrower doesn’t fit inside of that box, it makes it harder for them to gain new products.”
Still, another key focus for next year – especially with a slew of refinance opportunities coming down the line – will be client retention and making sure the top retail lenders don’t snag customers brokers have worked hard to secure.
“We’re really great at offering awesome products and lower rates and lower costs – but the thing that we need to work on most is, how do we retain those clients?” Shelton said. “Especially seeing on the horizon that those rates are going to start tacking down, what are we doing as a community to ensure that we’re able to touch back on those clients that we want to serve?”
Kevin Leibowitz, founder of Grayton Mortgage, advises clients facing fluctuating mortgage rates to lock in their rates if they’re near the qualification cutoff. https://t.co/A9d1UiDwPp
— Mortgage Professional America Magazine (@MPAMagazineUS) December 4, 2024
Which buyer types are set to dominate the mortgage market next year?
On the purchase side, identifying the type of borrower likely to be making a big splash in the 2025 market has also been a top priority for mortgage professionals in maximizing growth potential for the year ahead.
Shelton said first-time and second-time homebuyers could return to the market in a meaningful way next year as lower rates give them some more breathing room when it comes to affording to type of home they want.
“A lot of the first-time homebuyers that we’ve had in the last year and a half to two years have only been able to purchase homes that are a little bit smaller than what they were looking for because rates were high and they just couldn’t afford more,” she said. “And then we had a lot of buyers that are still sitting on the sidelines because they just can’t afford to purchase a home.
“So when rates start to come down, I think we’re going to see an influx in first-time homebuyers because it’s going to allow them to get back into that market and get in the game. But I also think a lot of homes will open up because a lot of the people that were first-time homebuyers recently will start to upgrade their homes because then they’ll also see the benefit of taking advantage of that lower rate and upgrading to a larger home.”
Plenty of opportunity lies in wait for brokers in 2025
That’s not to say that brokers should be focusing too narrowly on that buyer cohort. The advice Shelton said her team is passing on to clients is that if they want or need to move, an interest rate shouldn’t be the only decisive factor.
Another top piece of advice for next year: “Keep your eyes open,” Shelton said. “Obviously we want to lean into client retention, but you also want to make sure that your tech systems are up to date because as we see that federal funds rate come down and interest rates start to come down, what that’s going to mean is that we’re probably going to have an influx of really awesome specialty programs – whether it be for government loans or specific conventional products that come out.
“So it’s just about making sure that we’re really up to date with the programs that we do have available and what’s rolling out so we’re able to also leverage those programs.”
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