Possibilities remain despite downturn, suggests broker
Amid rising interest rates and a cooler housing market, the past two years have presented plenty of hurdles for the mortgage broker profession – but among seasoned brokers, the slower pace reflects a cyclical market rather than an existential crisis.
Yury Shraybman (pictured), of Innovative Mortgage Brokers, told Mortgage Professional America that the current slowdown, which has seen purchase activity taper off as borrowing costs surged upwards, bore little comparison to the meltdown that followed the market crash of 2007-08.
“It’s absolutely an interesting time to be a broker,” he said. “I was also a broker during the 2008 collapse, and this is nothing compared to that. That was a lot more devastating, a lot more horrible.”
During the COVID-19 pandemic, when rock-bottom interest rates fueled a housing market boom, it may have seemed to the uninitiated that the profession was a sure-fire means of making a fortune. But Shraybman said more experienced brokers always realized that the market moves in peaks and troughs, and that the prolonged uptick was never likely to last.
“If a loan officer just goes into this industry because they think that there’s a lot of money to be made, that’s not [necessarily] the case,” he said. “It’s a rollercoaster industry. It always has been – where there’s been the good and there’s been the bad, and that’s why you have to make sure that during the good times, you take advantage of all your resources and prepare for the bad times.
“It’s a long-term plan. There’s going to be ups and downs, like any type of business. It’s just a matter of responding to it.”
Andrew Russell of RCG Mortgages sees social media as a "must-have" rather than a "would-like," crucial for staying competitive and educating clients about mortgage options. https://t.co/BjXx0Ye9RR#mortgageindustry #industrytrends #mortgagemarekting #mortgageadvice
— Mortgage Professional America Magazine (@MPAMagazineUS) February 19, 2024
What important role are brokers playing in the current market?
Purchase activity may no longer be near the heights of the pandemic, although a mild recovery from the lows of recent times is expected to gather pace in 2024.
Still, brokers are playing a crucial role in the current market, according to Shraybman – not least on the educational front, with many homebuyers (and particularly the first-time buyer cohort) unaware of the options at their disposal in the mortgage space.
“A lot of people are still under the misconception that you need 20% down, and that’s kind of what gets people out [of the market],” he said. “In reality, everybody like myself has access to conventional with 3% down, or FHA [Federal Housing Administration] with 3.5%.
“In my area, there are downpayment assistance programs, so the affordability is there. I think it’s just maybe lack of information where a lot of people disqualify themselves.”
Even first-time buyers with excellent income, virtually no debt, strong credit scores and ample downpayment funds can be dissuaded by the current market, Shraybman said, particularly with interest rates still high and an uncertain future ahead for home prices.
That’s where the mortgage professional can come in, he added, to guide new buyers through the process and provide counsel on how they can find opportunity in different programs.
“That’s pretty much the responsibility of loan officers, to open up the eyes of people and let them know that if you do FHA 3.5% down and you include seller assist, that’s very minimum money that people need to come down out of their pockets,” he said.
Opportunities remain for borrowers despite current challenges
Meanwhile, changing trends in the mortgage market mean nowadays it’s much quicker and more convenient for borrowers to refinance, spared the cumbersome process of signing physical documents and mailing them through their broker.
That gives borrowers some extra leeway in the market – particularly if home values appreciate in the coming year or two. Tapping into that extra flexibility is important, Shraybman said, to avoid missing out on equity purely for the purpose of saving on interest rate.
“It might be important to point out that the rates are currently getting are temporary,” he explained. “Right now, the rates are in the sixes – it’s not going to be a loan that the borrower stays in for a long time. Before, I think people were refinancing on average around [every] seven years or so.
“But with an improvement in technology, it might be much sooner than that. So I think it’s just very important for people to look at the overall picture rather than just the particular rate.”
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