Adapt & Differentiate or else..

July 13, 2024: The recently published 2023 HMDA report on mortgage transactions by lenders, which includes banks, savings associations, credit unions, and mortgage companies, had some interesting and revealing details: There were 4,460 lenders reporting in 2022, and 5,113 lenders reporting in 2023. (The data, however, does not specify the exact number of new mortgage lenders that were non-depository lenders in 2023).

This is a year-over-year increase in the number of reporting mortgage lenders of about 14.6%. Concurrently, there were 14.3 million home mortgage applications in 2022 and 10 million home mortgage applications in 2023. (This includes HELOCS). A decrease in the total number of mortgage customers by about 30%.

In 2023, non-depository independent mortgage bankers & brokers originated 68.8% of first-lien, one- to four-family, site-built, owner-occupied home-purchase loans, an increase from the 60.2% originated in 2022. This represents a 14.29% increase in home mortgage loans originated by independent mortgage bankers or brokers.

Three key takeaways that can be derived from the 2023 HMDA data if these trends continue: First, mortgage loan officers can expect much more competition for customers. And second, independent mortgage bankers and especially mortgage brokers will have a growing influence in the real estate market. And third, mortgage loan officers will need to adapt and differentiate their marketing and sales strategy to fit this new lending environment.

An effective way to keep the pipeline full is to provide a wide range of mortgage products from standard agency & government, non-QM, hard money, commercial, and construction loans. This type of platform mostly favors mortgage brokers. My guess is there will be a growing number of seasoned mortgage loan officers will become brokers so they can better focus on their customers’ unique preferences and help them reach their goals by offering unique mortgage products.

“The only way to make sense out of change is to plunge into it, move with it, and join the dance” – Alan Watts, Author of “The Way of Zen”, The Wisdom of Insecurity and “The Book: on Taboo Against Knowing Who You Are.”