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We’re currently living through a period of immense upheaval in the housing and mortgage markets. Back in 2008, we called the financial crisis “the Great Recession.” A decade from now, high school history books may refer to our current economic troubles as “the Great Reset” or “the Real Estate Reset.” Whatever name sticks, there’s no doubt we’re experiencing an inflection point that will have lasting impacts.
In response to declining earnings and profits, many mortgage lenders like Rocket are desperately trying new tactics to capture more business, such as paying referral fees to real estate agents who become licensed mortgage officers. However, early attempts have largely failed – most agents lack the skills or motivation to succeed as loan officers. Still, expect more industry jostling and regulation-bending efforts as things get tougher in 2023-2024.
It’s not all doom and gloom, though. According to Fannie Mae projections, mortgage rates could start dropping by next quarter. If true, we may see a surge of spring 2024 refinancing that kicks off a new “Roaring Twenties” era for the housing industry. Home prices have also rebounded recently, with Americans gaining back $2 trillion in home equity over the past year.
The key driver to monitor is the Fed’s balance sheet policy. When the Fed buys mortgage-backed securities, rates tend to fall. During crisis periods like 2008 and 2020, Fed purchases ballooned, sending rates to historic lows. Now their balance sheet is shrinking again, pushing rates higher. However, if they smell a recession, expect them to open the pocketbook once more.
For mortgage officers, the name of the game is hanging on until fall or spring when the environment may improve. The coming months promise to test everyone’s mettle. But opportunities always emerge for those left standing after market shakeups. Rather than panic, steel your mindset to navigate the current storms and prepare for better days ahead. Stay resolute – we’ll get through this together.