Emphasizing Efficiency amid a Challenged Market For Mortgage Originators

• Author: Bryan Miller
• Posted: 2024-12-19

While business owners often stress efficiency in good times, they need to focus on it now. Lack of available revenue will favor those who excel at execution, even with the current economic climate. In this context, mortgage loan providers can apply kaizen principles to boost efficiency. The most essential element of kaizen is understanding cost structure. By understanding cost structure, mortgage loan providers can make the most appropriate decisions.

Rising interest rates and limited housing supply have made it difficult for mortgage originators to gain a profit in this environment. In the third quarter of 2022, the mortgage origination market has been affected by multiple challenges. 30-year fixed mortgage rates are approaching 6%, and the Federal Reserve has enacted substantial increases in interest rates. Additional increases are likely soon. Additionally, the Federal National Mortgage Association's refinancing forecast fell by 23% from March to June, and new loan products such as adjustable-rate mortgages and home equity lines of credit are beginning to enter the market.

TransUnion's latest report on the mortgage industry revealed what's happening in the mortgage loan industry. Despite the challenging market for mortgage originators, there's still plenty of tappable home equity in the United States. And although rates and inflation have pushed up home equity, many consumers have been putting off their home purchases. This is one of the reasons why Rocket Companies has seen a decline in its stock.