Why one broker knows the refi boom is over

He shares how the success he had last year will soften the landing this year

Why one broker knows the refi boom is over

John Sarkisian knew that the refi boom was over when underwriting turn times could be measured in hours, not days. The broker/owner at Fortress Home Mortgage explained that in the past few weeks he’s seen underwriter turn times drop dramatically as rates have risen and refinance volume has fallen. He’s seen it in his own business, too. Where in 2020 his volume sat at 70% refi and only 30% purchase, that balance is already beginning to swing towards purchase.

In 2020, Sarkisian enjoyed record profits and income, like so many other originators. Now that volume is beginning to drop off, he’s not planning to take a break. Rather, he’s reinvesting those profits in new business channels, passive income generators, and marketing to ensure that he can stay as close to his 2020 peak as possible.

“Regardless of what markets are doing, I’m always working on better ways to market my business,” Sarkisian said. “There’s always something new coming down the pipeline in that regard, like building online sales funnels with landing pages and chatbots. What happens in a refi boom, though, is that you lose the time you could apply to these other methods of generating business. I’m a one-man broker shop, and that means I’m handling multiple things at one time. If I’ve got an influx of refinance loan applications, I’ve got to start spending more time processing because the phone is just ringing.”

Read more: How one Texas broker managed client frustration in the middle of an ice storm

As his refinance volume has begun to tail off in recent weeks, Sarkisian has been able to shift his efforts back to marketing in the purchase channel. He’s outsourced some of his digital marketing efforts to experts in the field, and has worked to up his SEO presence through more regularly generated blog posts. As COVID numbers begin to go down and vaccination rates go up, too, he’s having more in-person meetings and developing connections the old-school way, even if he’s replacing handshakes with a fist-bump.

Profits from the refi boom can play a crucial role in helping an originator transition back to purchase. Through discipline and smart reinvestment, that money can be used to generate more leads and more referral partners that will help out down the road, and the cash should give an originator the freedom to experiment with some new marketing tools - but only if they act proactively and with discipline.

Sarkisian likens the experience of a refi boom to driving. 2020 took his business from 60mph to 100mph, fast. As carryover volume tails off, by 2022 he’ll be back at that 60mph level. By bracing for the inevitable drop in volume and finding new ways to make up the gaps, however, he’s ‘bracing’ for that drop in speed. The flexibility offered by that 2020 income, too, will allow a savvy originator to take advantage of new opportunities.

Younger originators, Sarkisian noted, might be tempted to go a little wild with their new cash. He admits that when he started in the mortgage business he didn’t know how to properly invest his profits for growth. However, he believes that once mortgage pros have felt the drop-off from a refi boom ending, they’ll learn to stay aggressive in looking for new business.

“You’ve got to stay aggressive by looking at other avenues and finding other ways to make money,” Sarkisian said. “Whether that’s getting a realtor license, or possibly doing insurance, anything related to what I do overall, is a potential revenue stream.”

The recent spat between United Wholesale Mortgage and Rocket, Sarkisian explained, is one such opportunity. This huge and public fight for broker business is raising the profile of mortgage brokers across the country. Sarkisian believes that by marketing himself in the right ways at this moment of increased broker notoriety, he can reach customers he might never have found before.