A just released survey of 200 mortgage lending professionals found the vast majority of lenders (94 percent, up from 62 percent last year) expect an increase in mortgage purchase production. These results are from the second annual Lenders One Mortgage Barometer conducted by The Lenders One® Cooperative, a national alliance of independent mortgage bankers, correspondent lenders, and suppliers of mortgage products.
Growth Predicted Across the Board
The current mortgage market isn’t without challenges. Housing inventory remains limited and interest rates have increased sharply since the presidential election. The higher interest rates are certain to dampen refinance activity. According to Bryan Binder, chief executive officer of Lenders One, “To be successful in this environment, lenders need to focus on the purchase market and new innovation to replace lost refinancing volume. Lenders must also focus on tools and solutions to help them improve operating efficiencies within their businesses.”
The demographics most frequently cited as offering robust opportunity in 2017 include Generation X (86 percent) and millennials (85 percent, up from 79 percent last year). Following closely are nontraditional buyers, those who are in the rental and vacation home markets (84 percent, up from 70 percent last year); boomerang buyers, those people who can now qualify for a mortgage after undergoing a short sale, foreclosure, or bankruptcy (83 percent, up from 68 percent last year), and baby boomers (82 percent).
The Big and Small of Mortgage Futures
Lenders identify ongoing strong Jumbo Loan Activity. A full 93 percent of respondents report that they already originate non-qualifying mortgage (non-QM) loans – commonly known as Jumbo Loans. Bolstering one part of the non-QM market is continued home appreciation, especially in higher end markets, which has created demand for jumbo loans. A robust 91 percent of lenders project a significant increase in jumbo loan origination volume in 2017 for their organization. Given the growth of the sharing economy and services such as Airbnb, 82 percent of mortgage lending professionals anticipate an increase in people looking to finance larger homes to take advantage of rental incomes.
Still, the size of jumbo loans and lack of federal mortgage guarantees (non-qualifying mortgage loans) means that the majority of business will remain in the traditional markets. The populations that are most frequently cited as offering robust opportunity in 2017 include Generation X (86 percent) and millennials (85 percent, up from 79 percent last year).
Following closely are nontraditional buyers, those who are in the rental and vacation home markets (84 percent, up from 70 percent last year); boomerang buyers, those people who can now qualify for a mortgage after undergoing a short sale, foreclosure or bankruptcy (83 percent, up from 68 percent last year) and baby boomers (82 percent).
Continued economic improvement should give first-time homebuyers the boost they need to enter the market. In fact, about three in five lenders (59 percent) say it is very likely that there will be an increase in first-time homebuyers in 2017. The optimism around first-time homebuyers aligns with the recent report from the National Association of Realtors® that shows the share of sales to first-time homebuyers grew from 2015 to 2016 and was the highest it’s been since 2013. However, many lenders are predicting some challenges to mortgage industry growth with respondents seeing consumer debt as the highest risk factor this year (41 percent).
Survey Methodology - The Lenders One Mortgage Barometer was conducted online among a random sample of 200 mortgage lenders. Fieldwork was conducted by independent research firm Ebiquity between January 4, 2017 and January 14, 2017. The margin of error associated with the sample of n=200 is +/- 6.9 percent at a 95 percent confidence level.
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Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 10 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. With the Pacific Ocean a couple of miles in the opposite direction.
Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years with articles listed on Yahoo Finance, Benzinga, and uRBN. Brian is a regular contributor at Realty Biz News
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FAQs
Recent data from Inside Mortgage Finance shows a significant leap in broker market share, jumping to 24.3% in Q4 2023, the highest number we've seen since 2009. This is a true testament to the care, commitment and passion brokers across the country have for their borrowers.
How many loan officers have left the business in 2024? ›
By January 2024, though, that figure plummeted 47% to just 93,938 MLOs. That's nearly half of the producing loan officers in the United States who are no longer in business.
Will AI replace mortgage brokers? ›
While AI technologies have the potential to enhance efficiency and accuracy in real estate transactions, they are unlikely to replace human agents entirely. Real estate transactions involve complex emotional and financial decisions that require human empathy, intuition, and negotiation skills.
Is now a good time to get in the mortgage business? ›
There's never a bad time to move into the mortgage industry. As it turns out, the mortgage industry is fertile ground for those looking to shift into something that's new, lucrative, and actually makes a difference in other people's lives.
Are mortgage loan officers becoming obsolete? ›
The Verdict. In conclusion, while the use of automation and AI in the loan origination process is increasing, it is unlikely that loan officers will be entirely replaced by machines.
What is the future of the mortgage industry? ›
Looking at the mortgage landscape in 2024, it's clear that technology plays a crucial role in reshaping the industry. These technologies, from AI and machine learning to blockchain and big data analytics, make the mortgage process more efficient, secure and customer-friendly.
Are people leaving the mortgage industry? ›
It was another brutal year, pushing loan originators to work longer hours, close loans faster while diversifying their mortgage product offerings. According to data from Ingenius, tens of thousands of loan officers exited the industry in 2023.
What is the turnover rate for mortgage loan officers? ›
Loan officer turnover is high. From 2002-2020, turnover averaged 38% according to the MBA and Stratmor Peer Group Roundtable Program. It's extremely difficult to retain purchase business, which is very relationship dependent, if a large portion of your loan officers leave every year.
Why do loan officers quit? ›
If you lack support or do not work within a team, you are more likely to struggle with burnout as you have no one to turn to for help or to voice concerns. Many entering their first year as new loan officers complain about a lack of support and training when it comes to working as a loan officer.
Which jobs will AI not replace? ›
65 Jobs That AI Can't Replace
- Jobs Requiring Human Interaction and Empathy. ...
- Therapists and Counselors. ...
- Social Work and Community Outreach Roles. ...
- Musicians. ...
- High-Level Strategists and Analysts. ...
- Research Scientists and Engineers. ...
- Performing Arts. ...
- Judges.
AI is optimising the mortgage brokering process by automating tasks, which leads to efficiency gains. It aids brokers in analysing customer data, predicting risks, and expediting loan approvals. However, it can't fully replace the empathetic and personalised service provided by a human broker.
Will AI take over underwriting? ›
We could answer this question with a quote from Boston Consulting Group: "AI will not take over the job of an underwriter, but the underwriter that leverages AI to do the job better will."
Is the mortgage industry struggling? ›
In all of 2022 and through the first half of 2023, the average mortgage lender lost money on every mortgage it originated. In Q1 of this year, the average loss was $1,972 per loan. In Q2 the size of the loss improved to $534 per loan.
Is the mortgage industry lucrative? ›
The best Mortgage jobs can pay up to $242,000 per year.
The mortgage industry plays an essential role in helping people acquire a home or other real estate. A loan officer is a typical position in the field, and the one most home buyers are likely to encounter first.
What is the outlook for mortgages? ›
On 30 May 2024, the average 2 year fixed mortgage rate is 5.80%. While this is a significant drop from its July 2023 peak of 6.86%, it's still much higher than December 2021 when was 2.34%.
Is it good to be a mortgage broker? ›
Unlimited earning potential
Since you are often your own boss, your earning power rests on your own shoulders. Mortgage brokers have great earning potential, and that's one reason many people get into it. However, one should not assume that this profession will earn you money overnight.
Is it hard to be a successful mortgage broker? ›
A successful mortgage broker requires a variety of professional and interpersonal skills, most notably: Openness: Clients will have to share sensitive personal and financial information with their mortgage broker, so you need to quickly establish yourself as trustworthy.
What is the most a mortgage broker can make? ›
Licensed Mortgage Broker Salary in California
| Annual Salary | Monthly Pay |
|---|
| Top Earners | $107,079 | $8,923 |
| 75th Percentile | $100,700 | $8,391 |
| Average | $84,173 | $7,014 |
| 25th Percentile | $74,000 | $6,166 |
In fact, they found that Mortgage Brokers are now used for 90% of applications which is up from 77.5% last year*.
