Better times seem to be on the way, says lending exec
After a bumpy couple of years for the US mortgage space, 2025 is just around the corner – and hopes are high that a better market outlook is coming into view.
Rapidly rising interest rates and surging inflation pushed an increasing number of borrowers to the margins from early 2022, resulting in a much cooler market than the red-hot activity seen at the height of the COVID-19 pandemic.
But positive signs are emerging as mortgage lenders gear up for the year ahead, according to a top executive in the lending space.
Marianne Kozak (pictured top), EVP, national wholesale/non-del sales at LoanStream Mortgage, told Mortgage Professional America that optimism appeared to be on the rise among the US lending and broker communities ahead of 2025. “I think for the first time in a couple of years, mortgage lenders and mortgage people are really excited about what’s going to happen,” she said.
“And it’s interesting because we don’t really know, but I think we all have this general consensus that, ‘Look, we’ve gotten through the last two years and it’s been a struggle for many companies.’ We’ve seen many large companies just completely get out and bow out of the space, but I’m seeing more and more brokers that are going off on their own and starting their own companies again. There was a flight to banks or larger companies a couple of years ago – now you’re seeing that trend change.”
That conviction is borne out of a belief among many brokers that they’ll be able to drive enough business to survive and thrive in the coming market, she said, a positivity that’s also reflected elsewhere in the industry. “And I can’t say that that’s been what we thought for the last couple of years,” she said.
Jamie Cavanaugh, president of Amerifund Home Loans, sees a positive refinancing outlook for veterans with decreasing rates, notes first-time homebuyers are increasingly using downpayment assistance and family support due to affordability challenges.https://t.co/PSkc6xzWOb
— Mortgage Professional America Magazine (@MPAMagazineUS) October 25, 2024
How long will it take for things to pick up again?
The slower market seen since 2022 – coupled with wider economic uncertainty – meant many companies in the mortgage space doubled down on what they needed to do to make it through that instability. Now, though, hopes are building that another bumper market is on the way, according to Kozak.
Quiet signs of that revival have already been seen in 2024, although Kozak noted that an immediate upswing shouldn’t be expected. “I think borrowers have decided that they’re not going to sit on the sidelines anymore and wait for the rates to go down,” she said. “It’s time to make a move one way or another, whether they’re going to sell or buy or refinance.
“The market’s been very volatile and continuing to be very volatile. So I think we’re just going to continue to educate our customers and help them grow their business. That’s really been our motto this year.”
What impact will the upcoming election have?
While green shoots are appearing for next year, one big question is looming: namely, how the economy will react to the result of next week’s presidential election.
That battle will decide who leads the country into the next four years – but Kozak said with markets likely already primed for either outcome, a big immediate downward turn for the economy doesn’t look likely. “I don’t think the election, one way or another, is going to [cause] too much volatility in the market, just because I think everybody kind of knows what the policy is on both sides,” she said. “I think the markets really sort of adjust to it.
“It’s been an incredibly volatile market anyway all year. I think there’ll be some small adjustments, but we already know the Fed’s been very outspoken about it: they’re going to cut rates.”
That path is unlikely to diverge regardless of who emerges as the winner of Tuesday’s (November 5) contest. “They’re going to continue on a rate cut cycle,” Kozak said. “Whether or not we have one or two by the end of the year, we don’t know. What we do here is we try to continue to offer products and services for our customers… We give them different ways to qualify their borrowers and I think that’s the best thing we can do – help the customers close more loans… through the end of the year and beyond.”
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