One shares how he differentiates himself in a tough market
Mortgage loan originators don’t need studies to know originations are at historical lows, but along has come another survey to pour salt into the wound.
According to the TransUnion’s recently released Q1 2023 Credit Industry Insights Report, mortgage originations were at near-record lows due to interest rates – down from 2.9 million in the fourth quarter of 2021 to one million in the fourth quarter of 2022. That represents a 65% year-over-year drop. Moreover, the report found refinance originations fell by 89% year-over-year from 1.3 million to 143,000 – the lowest level to date.
“The relatively higher interest rate environment has depressed mortgage refinancing in particular,” Joe Mellman (pictured top left), senior vice president and mortgage business leader at TransUnion, said. “Interestingly, cash-out refinance hasn’t been as impacted as rate and term refinance.”
Is cas-out refinance risky? Take a quick look at some of the risks that come with cash-out refinancing here.
Homeowners still tapping into equity
Coupled with the increases observed in HELOC and home equity loan originations, this indicates that homeowners are still interested in tapping their home equity – even at higher interest rates, Mellman said. “It is also encouraging that purchase originations remain near the lower end of the normal activity range, indicating that consumers are continuing to purchase homes even in this higher-rate environment,” he added. “While delinquency levels remain below historical norms, this marks the fourth consecutive quarter of increases – a trend worthy of continued monitoring in 2023 as macroeconomic volatility and the increased cost-of-living may be starting to affect delinquencies.”
Mortgage originator rolls with the punches
For those not on the mortgage front lines, this all could be viewed in the abstract. But for Nate Fain (pictured right) of UMortgage, the reality is hardly an abstraction.
“One of the things that is going on in the market right now that’s really tough is there are a lot of people in the industry for not a lot of deals right now,” he told Mortgage Professional America. “The biggest hurdle we have is how can we differentiate ourselves from the rest of the market and gain market share that way. That might be through content, that might be through the messaging in the content. That might be different programs – having some non-QM options.”
The main focus for him is social media, and he’s become prolific in producing compelling videos offering an inside-the-ballpark view of the mortgage industry.
“We’re always looking to go a little bit against the grain and also find ways that make us unique,” he said. “It’s been a challenging 12 months, but we just see it as a blip on the radar – looking at the micro rather than macro, right?”
The key now is not to get mired in the current slowdown but look to the future, he added: “We focus on the long term,” he said. “We know our models are going to work and it’s working right now. We know our way of doing business is the future. We’re dealing with the pain right now that everyone is feeling, but we’re also focused on the future, on building this business for the future. That’s really what we’re focused on.”
For the time being, however, mortgage originators might be feeling a bit like Sisyphus trying to push the boulder over the hill. Fain had the presence of mind to pivot to the purchase market just as the refi wave waned – fully aware the party was going to end. This timely pivot also helped him avoid the most corrosive effects of economic downturn.
“One of the things that I learned from that experience is this could all end,” he said of the recent refinancing wave that has now dissipated. “I knew that when rates were that low rates would go up – what goes up must come down and what goes down must come up when it comes to mortgage rates.”
While he availed himself of the low-hanging fruit of refis, he was quick to focus on the original mission, he noted. “I got as much as I could those couple of years,” he acknowledged. “I looked at it as a capital injection – this is phenomenal, but I won’t let it distract me from what mission I was on before rates did go down. When I look back, I’m back to my 2019 ways but doing it the 2023 way with skills I’ve developed over the last four years.”
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