Navigating a Compressed Mortgage Market: Insights from the 2023 Mortgage Industry Event Season 

2023 was a challenging year for the mortgage industry as rates slowly climbed to a peak of just over 8%, and more and more borrowers opted to hold out until the tides turned. Total Expert was on-site at events—like Mortgage Bankers Association (MBA) Annual and Digital Mortgage—all year long to connect with thousands of mortgage professionals, discuss the challenges and opportunities ahead, and strategize ways to position each mortgage lender for success. 

Total Expert Chief Lending Officer Dan Catinella was front and center to engage with mortgage leaders from across the country, and these are his big takeaways from the 2023 mortgage event season: 

Industry forecast and projections  

Mortgage leaders across the country eagerly awaited an update from the MBA on where the housing market is headed. According to MBA Chief Economist Michael Fratantoni, the U.S. economy has been resilient throughout 2023, but MBA is forecasting that the combination of higher interest rates, tighter credit conditions, and a depletion of pandemic-era household savings will lead to a mild recession in the first half of 2024. Purchase originations are forecast to increase 11% to $1.47 trillion next year. By loan count, total mortgage origination volume is also expected to increase by 19%, to 5.2 million loans in 2024 from 4.4 million loans in 2023. 

Fratantoni believes that as the economy slows and inflation moves lower, longer-term rates will decline from current levels, helping to bring mortgage rates lower. However, the spread between mortgage and Treasury rates remains roughly 120 basis points wider than typical, due to a combination of factors. MBA’s baseline forecast is for mortgage rates to end 2024 at 6.1% and reach 5.5% by the end of 2025, as Treasury rates decline and as the spread narrows. 

Market growth opportunities  

As the market has compressed significantly from 2021 levels, mortgage lenders are focusing heavily on where they grow. There’s a heightened focus on recruiting efforts and ensuring their originator acquisition strategy and process is optimized heading into 2024. Leaders at lenders of all sizes are keen to combine market intelligence technology with sales and marketing automation to maximize that effort. Many lenders are also looking at their current recruiting processes and adapting it to increase their ability to attract top sales talent to their organization. 

Maximizing the lifetime value of every customer  

With the decline in overall mortgage originations, lenders are realizing just how many opportunities they’re leaving behind by not nurturing relationships with their existing customers. Mortgage industry customer retention rates still hover in the ~20% range, so there’s a tremendous number of untapped opportunities buried in their customer databases. As data intelligence solutions, such as Total Expert Customer Intelligence, continue to evolve, they give sales teams at mortgage lenders the upper hand by ensuring that they don’t miss out on the next opportunity to serve their customers. In addition, while real estate agents are still the primary source of purchase business, lenders have long desired to get to the customer prior to them working with an agent. These customer intelligence solutions are no longer a nice to have—they’re now table stakes to compete in this new market. 

Growing the homebuyer pool 

Heightened interest rates and home prices have made buying and owning a home more difficult in the middle- and lower-income bands, particularly for first-time homebuyers. The most significant barriers include debt-to-income ratios, credit quality and history, and insufficient down payment. Mortgage lenders are putting a large focus on education and advice engagement strategies to combat these areas, and ensure potential homebuyers understand what and how they need to prepare for home ownership along with the key benefits over renting. 

Maximize existing tech investments  

As lenders have been on a steady quest to reduce operating costs and cost per funded loan, they’ve also been evaluating their entire technology stack and determining which solutions provide a real return on investment (ROI). What many lenders have found is that they’re paying for tech that doesn’t provide a clear ROI, has very little user adoption, and they aren’t using the native automation capabilities that they’re paying for. A large focus has been put on optimizing their current tech investments, leveraging the capabilities they can enable, and ensuring they maximize the value to their organization. Mortgage lenders are also using this market to ensure they’re aligning themselves with tech partners for the future—the ones that are proving they will continue to invest and innovate, even through tough times to best support their customers. Lenders desire to work closely with their tech partners to strategize around their business objectives and execute together to solve their challenges and react quickly to the opportunities in the market. 

Mortgage industry events continue to provide the best opportunities for lenders, loan officers, and marketing professionals to connect and have honest conversations about the challenges—and opportunities—we’re all facing. I learn something new at every event, but this year it became clear just how important using data and intelligence will be for the mortgage industry in 2024. Without a plan or tools to turn data into action, you won’t be able to maximize customer retention, surface new opportunities, or provide proactive education and advice to all existing and potential homeowners.  

Connect with the Total Expert team to discuss how we can help you optimize your business and be prepared to seize the opportunities in the market.