by Ray Brousseau
Low interest rates have been the norm for nearly a decade now, and many mortgage professionals working today have only known this environment. As interest rates increase and opportunities for rate reduction refinances decrease, originators have little choice but to adapt their business to the meet the market’s current environment. According to forecasts from the Mortgage Bankers Association (MBA), total mortgage origination volume will decline from $1.7 trillion in 2017 to just over $1.6 trillion this year, with the majority of the losses coming from the refinance market. The MBA anticipates a 5% increase in purchase originations, but a more than 20% decline in refinances.
As mortgage professionals shift toward increased purchase and cash-out refinance business, it is imperative they adapt appropriately and continue to serve their clients responsibly. How? By doing these five things, originators have the potential to be more successful and provide a better customer experience in a shifting mortgage landscape.
No, really listen. When you meet with potential clients, hear what they’re saying and make sure you truly understand their objectives. Ask: What are the borrowers trying to accomplish? Do they want to purchase a home? Do they want to downsize or move up? Refinance their current home? Find the money to remodel their home? Get cash to pay down credit-card debt, or help pay for a child’s college tuition? Make sure you’re asking questions and actively listening to the responses to deliver the solution that is best for them.
2. Don’t make decisions for your borrowers.
Give your clients all the options. Don’t pre-screen, and don’t pre-judge. This goes hand-in-hand with listening to what your client actually wants and/or needs. You may think a mortgage product with a higher interest rate won’t be of interest to your client, but they know their full financial picture. A long-term, fixed-rate mortgage with a higher rate isn’t for everyone, but it may be better suited for your clients’ specific financial situation if they’re carrying a lot of high interest rate credit-card debt and want to pay it off with a cash-out refinance to potentially decrease their total monthly payment. Your clients also may want to consider non-fixed-rate products. The important thing is to present all the information and options to your borrowers and let them decide what provides the most benefits for their long-term financial goals.
3. Communicate constantly.
It seems simple, but it is critical to keeping clients informed and ultimately satisfied with your customer service. Borrowers want to know what’s going on every step of the way. Purchasing a home or refinancing one can be an incredibly stressful time for your clients. You may know that it’s typical to not hear anything on a loan for a specific period of time, but your clients may not. So tell them. Good news, bad news, no news: Communicate. And make sure to ask them the best way to reach them. Some clients will want text updates, some will prefer phone calls, and others respond best to email. Knowing the best method of communicating with them is just as critical as doing it regularly.
4. Be prepared.
Most lenders offer a wide variety of products for both purchase and refinance mortgages. Make sure you are up to date on the latest offerings from all your lending partners, so when you hear your borrowers’ objectives for their loan, you’re prepared and able to quickly present them with the appropriate options. If you present the features and benefits fully for the recommended programs, your clients will be able to make informed decisions about which loans will work best for them. Preparing effectively not only helps clients look to you as a knowledgeable resource, but also makes the most of your face (or phone) time with borrowers. You don’t want to waste their time or yours.
5. Be positive.
Although securing a mortgage is something you do every day, the same usually can’t be said for your clients. Your positivity can help turn what could be a nerve-wracking time into a more pleasant experience. Not every moment of the mortgage process is a positive one, but even if you have to ask for additional documentation or deliver disappointing news, use encouraging language to help clients move to the next step in the process. This is especially important if most of your contact with your clients is over the phone. Help them understand your phone call to them is a priority to you and not a chore. Borrowers need to feel you smiling through the phone, and sense your confidence that you can and will get this deal done for them.
Mortgage originators must be prepared for the changes coming in the composition of their mortgage pipeline. Purchase originations and cash-out refinances are likely to continue to increase as rising interest rates bring the number of rate reduction refinances down. Mortgage originators will make themselves an invaluable resource for clients when they are well-versed in the range of loan products available and prepared to discuss all the options available to their borrowers. At the same time, the main focus for any successful originator should be high-touch customer service. Being disciplined in these skills will help mortgage professionals attract and retain new clients, while continuing to satisfy repeat customers.
Alternative product categories of non-QM loans
Marketing the non-QM loan