Buyers still need experienced and talented officers, argues mortgage pro
It was a development few saw coming: a huge surge in activity and price growth across the US mortgage and housing markets at the onset of the COVID-19 pandemic, a spike as dramatic as the slowdown that followed it.
Between 2020 and 2022, borrowers took advantage of pent-up savings and rock-bottom interest rates to enter the market, in many cases moving away from cramped city apartments to continue working remotely in more spacious surroundings.
Red-hot competition and homebuying activity saw prices shoot through the roof across many markets. Redfin data showed that Cape Coral, Florida home prices posted a massive 72% jump between May 2020 and May 2022, followed closely by Austin, Texas (69%) and Boise, Indiana and North Port, Florida, both on 67%.
Buyers’ total outlay on real estate ticked close to $3 trillion in 2021, a record high – with that year seeing the biggest transaction volume across the country for over 15 years.
But what goes up must come down, and as the Federal Reserve set out on an aggressive rate-hiking path around the beginning of 2022, buyers began to step back from the market amid rising borrowing costs and an affordability crisis spurred by high inflation.
Mortgage industry sees shift as professionals exit space
While the mortgage industry saw frenetic activity and huge volume amid the pandemic-era market boom, it’s also been gripped by a prolonged slowdown thanks to those higher mortgage rates and a dip in refinancing and homebuying.
In April, Insurance Business reported that insurance agencies were increasingly targeting mortgage brokers disillusioned with the market downturn as potential new hires.
The number of individuals employed in the real estate sector may have dipped since the beginning of the recent cooldown – but it’s far from doom and gloom where those who remain in the industry are concerned.
Tracie Mayo (pictured top), mortgage broker and owner at Savvy Mortgage Lending, told Mortgage Professional America there were still plenty of prospective buyers needing advice from dedicated professionals in the current market.
That’s presenting opportunities for loan officers and brokers who have remained in their roles. “It’s kind of like in real estate: realtors are leaving the market as well, because it’s hard to sell a house when you don’t have buyers,” she said. “But you can basically always just be there and start reaching out to people that need a good loan originator.”
Buyers determined to push ahead despite high borrowing costs
There’s little room left in the market for opportunistic buyer types who decided to take the plunge because of low mortgage rates during the pandemic, with Americans hoping to enter the market for the first time also encountering plenty of hurdles.
Still, other buyers remain just as eager to make their move despite current mortgage rates. “You usually see the move-up buyers or the experienced buyers – they don’t get deterred by the rate,” Mayo said. “They know, they’ve been through it.
“Some of us… have had 13-16% interest rates over the years and so they’re OK with the 7% rate. The first-time homebuyers are the ones that get kind of spooked or even honestly get to the point that they can’t even qualify or they can’t afford it – but the move-up buyers, they’re still fine.”
Mortgage rates are continuing to ease, falling for the third consecutive week to their lowest level in three months, according to Freddie Mac's latest Primary Mortgage Market Survey (PMMS).https://t.co/7dJ4brhjw6
— Mortgage Professional America Magazine (@MPAMagazineUS) June 21, 2024
The Federal Reserve’s decision to hold interest rates steady after its latest meeting also saw the central bank indicate that it now envisages just one rate cut as likely in 2024, a development that could mean mortgage rates stay higher for longer – potentially keeping buyers on the sidelines.
Nonetheless, Mayo said her client base was weighted around 70-30 in favour of buyers ready to make a move now compared with those who are holding out hope for further cuts.
For the latter cohort, waiting to time the market can be a dangerous ploy. “I usually try to educate those clients that you can wait, but then when the rates come down you’re going to have more competition and the value is going to be possibly higher,” she said.
“So I usually try to educate them on that – but I would say the majority of the people are still interested in moving forward if they can.”
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