Executive says focus and a strategic approach are key
Mortgage refinancing may have gone cold in the midst of rising rates since 2022, but borrowers are turning their attention back to the refi market with rates finally on a downward trajectory in recent months.
An average 30-year fixed mortgage rate of 6.08% as of September 26, according to Freddie Mac, marked a significant drop from the same time last year, when rates were perched at an average of 7.31%.
The resulting pickup in refinance activity has brokers on alert for potential business – and a proactive, strategic approach is required to compete against well-organized loan servicers, according to a top mortgage executive.
Tyler Hodgson (pictured top), executive vice president of growth at UMortgage, told Mortgage Professional America being front and center amongst the borrowing community was essential for brokers and loan officers against those giants. “We’re going to face a battle when the refis start coming back against the current loan servicers,” he said.
“These servicing companies have it dialed in on how to win refinances and we, as the local brokers, are going to lose a lot of clients to the servicers if we’re not staying in front of those clients, being involved and active, and focusing on those relationships that we have in our databases.”
Meaningful communication a must
Continuing to mine those databases is essential to deepening relationships and keeping connections active with existing clients, Hodgson said.
That needs to be more than just a surface-level interaction or transparent effort to get business. “You have to tee this up and begin this when you do their first transaction and you get to know the person,” he said, “and know what they care about, what their likes or dislikes are, and find out one thing that you could [use to] continue a conversation over time.
The tide is turning for mortgage brokers as interest rates drop! Jonathon Haddad, AIME’s new CEO, urges brokers to adopt an opportunity mindset and capitalize on this “beautiful whirlwind” in the market. https://t.co/uXqKpcmhyc
— Mortgage Professional America Magazine (@MPAMagazineUS) September 27, 2024
“Do they like sports? What’s their favorite food? Do they like to travel? Because if you’re reaching out at the time – ‘Hey, rates dropped, would you like to refinance? I’d like to save you some money,’ it’s too late and it’s inauthentic. You have to continue these conversations and have regular touches with these clients about things that are not just refinance.”
Seasoned mortgage professionals will have spent the past two years readying for a refinancing surge, especially with purchase activity also dipping during that time as higher rates pushed many prospective buyers to the sidelines.
What should newer brokers be keeping top of mind?
For newer brokers, meanwhile, the current market is rife with both opportunities and challenges: the prospect of a pickup in activity down the line, but with many would-be buyers still waiting to see how far rates could fall in the next few months.
Those who are new to the profession, according to Hodgson, should start their journey with training and mentorship. That means plugging in with the proper company, organizations and communities; the Association of Independent Mortgage Experts (AIME), at whose annual Fuse conference Hodgson was speaking to MPA, is a good first step, he said.
Setting out with the right approach is crucial to a strong start. “Ultimately, if you’re new in the industry, you’ve got to learn through your own losses and experiences – and that’s going to take a long time – or develop more quickly by learning from other experts,” Hodgson said. “So finding the right people to hitch your wagon to [is important].”
While rate drops are to be welcomed, the unpredictable market of the year to date also means brokers should approach the coming months with caution – and a willingness to put in the hard yards even as borrowing conditions improve.
Banking on a sudden surge in purchase volume is an unwise strategy, Hodgson said. “I think people expect the buyers to all come back out in droves as soon as we see a little bit of rate improvement,” he said, “but it might take a little bit longer than expected.
“So my advice to loan officers is just to be prepared that rates coming down isn’t the automatic, ‘Great, I’m going to close more deals again because rates are down.’ You’ve still got to go out and find the business.”
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