The Upside of Down

Investment banking firm Keefe, Bruyette & Woods (KBW) predicts a $280-billion dollar decrease in loan originations for 2017.  The report, titled “Mortgage Finance 2017 Outlook:  Higher Rates Could Be Here to Stay,” estimates a year-over-year drop in origination volume from 2016’s estimated $183-trillion to $155-trillion this year.   

One might conclude that companies and MLOs are going to be scrambling for pieces of a pie that’s 15-percent smaller than it was last year, with institutions like the Kroll Bond Rating Agency and the Mortgage Bankers Association also predicting a drop in originations for 2017.  The KBW report goes on to say, “We expect 2017 volumes to be lower than 2016 due to a sharp drop in refinance volumes, partially offset by higher purchase volumes.”

If you haven’t already adjusted your business plan and focus toward Realtor relationships and incubating buyer leads, it’s a good time to start.  Be sure to include Millennials in that plan, because they represent big numbers and big potential.  Millennials are…

  • the largest segment of the U.S. population at 87.2 million (U.S. Census Bureau)
  • the largest generational group of home buyers in the U.S. at 35%  (National Association of Realtors)

Millennials also fit squarely into age range where most people buy their first home.  Fannie Mae Senior Vice President and Chief Economist Doug Duncan says, “Our surveys of the prime first-time home buying age people suggest a very high, 90 percent-plus, want to eventually own a home.”  Loan officers not only need to gear up to manage and communicate with a large number of buyer leads, they need to build endurance because’s Chief Economist Jonathan Smoke says the process from initial interest to closing on a home will likely take longer going forward:  “The potential is there for the market to have the most first-time buyers….with elongated length of time that people are spending in that journey.”  

Overall loan volume may go down this year, but your production doesn’t have to.  Building and sustaining relationships with Realtors and potential borrowers is the key to success in 2017.  

Capturing and keeping the interest of prospects over time is challenging, but doing this well will help solidify your relationships with real estate agents.  Co-branded marketing that is fresh, high quality and consistent is a great way to establish new Realtor relationships and strengthen the ones you have.  

There’s no better way to build loyalty than building business together.