Activity is projected to pick up as rates continue falling
Mortgage rates are finally on the way down in the US, a trend that’s likely to see a welcome uptick in home purchase activity as affordability challenges ease in many markets.
But falling rates are also set to bring about an eventual surge of homeowners seeking to refinance – and a prominent industry executive is urging brokers and LOs to stay in front of their clients or else risk losing them to another mortgage professional.
Thuan Nguyen (pictured top), chief executive officer of Loan Factory, told Mortgage Professional America that a hotter market down the line would mean more competition than ever for brokers hoping to snag mortgage business, on both the purchase and refi sides.
That’ll see new opportunities and challenges for brokers and LOs looking ahead. “When rates come down, people will refinance for sure, and they’ll be more confident to go out there and buy a house,” Nguyen said.
“I always advise my agents that they need to become a better loan officer because competition is going to heat up more and more. Things will not get any easier – so becoming a better loan officer or better agent is the only way, and the best way, to grow our business.”
Top of mind for Nguyen, he said, is pushing loan officers to maintain regular contact with their clients, whether through emails, texts, or invitations to catch up in person.
That should be a “minimum” for LOs and brokers hoping to thrive in the busier market that’s on the way. “Everyone has to do the same. Everyone in this industry has to stay in front of their clients all the time,” he said.
“Otherwise, other loan officers, other realtors, will steal your clients. There’s nothing to hold your clients with you – the client is going to go with someone else when they’re [introduced] to another loan officer.”
Activity muted despite recent drop in mortgage rates
While mortgage rates are on the way down – hitting a low of 6.44% last week for the average 30-year fixed option – the market has yet to catch fire again, with prospective buyers and current homeowners alike seemingly happy to remain on the sidelines and wait for borrowing costs to tick even lower.
The National Association of Realtors (NAR) said that its Pending Home Sales Index, which measures pending sales based on contract signings, plunged to 70.2 in July, a low not seen since the measure began tracking data 23 years ago.
— Mortgage Professional America Magazine (@MPAMagazineUS) August 30, 2024
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The National Association of Realtors (NAR) said last week that its gauge of pending existing-home sales had slumped to its lowest level since it began tracking data in 2001 – and sales declined in all four major regions across the country.
Still, NAR’s chief economist Lawrence Yun said a continued dip in rates could provide a much-needed shot in the arm to the national housing outlook. “Falling mortgage rates will no doubt bring buyers into market,” he wrote.
Mortgage rates remain high compared to the rock-bottom lows of the COVID-19 pandemic, when the average 30-year fixed rate plummeted amid public health restrictions and the economy grinding to a sudden and dramatic halt.
Nonetheless, they’ve slipped considerably since the end of last year, when that average jumped to a high of 7.76% (November 2).
When will the mortgage market gather pace again?
A recent ATTOM report showed that the mortgage market recorded a sizable increase in originations for residential properties in 2024’s second quarter, spiking by 23.2% compared with Q1 – although the company’s chief executive officer noted it would be premature to read too much into that gain.
A similar jump arrived in spring 2023, Rob Barber said, “with lending dropping off significantly later in the year.”
The market’s current lethargy by historical standards is illustrated by the fact that overall activity remains 61.2% below the highs it hit in 2021, when hopeful buyers rushed to take advantage of access to cheap credit and historically low borrowing costs.
Still, Barber added that green shoots are appearing for the mortgage market at last: “With interest rates settling down and projections for more cuts from the Federal Reserve over the coming months,” he said, “it wouldn’t be surprising if business increased even more for lenders over the rest of 2024, or at least didn’t drop significantly.”
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