Rising insurance costs in Oklahoma put squeeze on mortgage industry

Oklahoma’s mortgage landscape is being reshaped by surging insurance premiums - placing a new strain on borrowers and lenders alike, already dealing with rising interest rates and inflated home prices.

“It’s one more challenge here, and it’s making high priced homes even harder to afford,” said Brett Baldwin (pictured), branch production sales manager at Revolution Mortgage. “For first time homebuyers, it’s made it increasingly difficult for them to get into the market.”

Higher insurance costs have become a critical affordability issue, especially for those entering the housing market for the first time. While existing homeowners may be able to offset rising costs with equity from a previous sale, new buyers are being hit with all the costs at once - and it's pushing some out of the running entirely, Baldwin said.

“We see down payment assistance agencies, finding ways to try to improve affordability,” he said. “But it’s not enough to offset high insurance, high interest rates and higher purchase prices. It’s still really difficult.”

This affordability squeeze is forcing lenders to adapt, with many mortgage professionals in Oklahoma proactively recalibrating debt-to-income (DTI) calculations and refining pre-approval practices to account for higher insurance figures.

“When those [insurance premiums] first started rising, and we hadn’t yet adjusted our estimates to account for higher insurance costs, we saw for a little bit buyers not just experiencing some shock based on the poor estimates, but also buyers that suddenly needed to maybe go pay something off to still qualify,” Baldwin said. “We’ve all now adjusted to those higher costs, and our estimates do account for that, but the payments are still high.”

In some cases, Baldwin said, borrowers are encouraged to get an insurance quote before even submitting an offer.

“We may even ask that they call and get a quote before they write an offer if we suspect the house may have a higher-than-normal insurance premium due to age or other factors just so that we can get them a good estimate and make sure that this isn’t going to be something that’s going to be outside the range of what they’re comfortable with for a monthly payment,” he said.

Despite these efforts, loan fallout tied to insurance issues remains a concern. While not as common today, there are still situations where unaffordable premiums - or problems with the home’s insurance history - can derail a deal.

“I did have one transaction about a year ago; it was a great buyer with good credit and no claims or anything personally, but the seller on the house that he was buying had made seven different attempts to file a claim. Many of those were $0 claims, but that house had basically been blacklisted by a lot of insurance companies,” he said.

Even though the home seemed structurally sound, the prior owner's claim history made it virtually uninsurable and therefore unfinanceable.

“They were completely unwilling to insure it because they assumed that, based on [the] claim history, there must be something wrong with the house itself,” he said.

In this environment, Baldwin emphasized the need for loan officers to step in early and offer support beyond just mortgage origination.

“If a customer is experiencing frustration, we offer to step in and help as much as we can [and] directly communicate with their insurance agents around what they need for coverage and what’s important,” he said. “Try to take as much off of their plate as possible.”

Clients are advised to shop smart, bundle policies, and look beyond premiums to scrutinize actual coverage and deductibles.

“Insurance companies are not just charging them more per year for that premium. They’re also cutting back in terms of the coverage and giving people higher deductibles,” Baldwin said.

This matters particularly in Oklahoma, where weather-related claims are a significant risk. “They may not replace the whole roof… they may just replace a section of it,” he said.

The situation is also shifting buyer preferences. According to Baldwin, insurance companies are tightening standards, and newer homes often come with far more favorable premiums.

“A newer home is always going to have much better insurance premiums than one that’s 10 years old or more,” he said. “So, we’re already seeing that when we’re giving estimates for multiple properties, they need to account for property taxes, homeowners' insurance, and just because two homes have the same price tag doesn’t mean they’re going to have the same monthly payment.”

With fewer existing homeowners willing to sell and many still clinging to pre-rate-hike mortgage deals - the market is leaning further into new construction.

“We are seeing a lot of incentives for new builds while we’re waiting for existing home sales to catch up,” Baldwin said. “Buyers are buying more new homes not just because [of] lower insurance costs, but also because that’s just what happens to be available.”

“We’re also reminding people, just generally speaking, that with insurance premiums increasing for everyone they need to revisit their insurance every year to make sure that it’s optimized for them still with the best coverage at the best price.”

As conditions continue to shift, it’s clear that rising insurance costs in Oklahoma are doing more than eating into household budgets—they’re reshaping the playbook for brokers, borrowers, and lenders alike.

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