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Are you a walker or a runner?
Many people are walkers. Walking is great exercise — it gets the endorphins flowing, can help us stay in shape and hopefully lightens our overall disposition. A recent article by Harvard Health Publishing also indicates that walking even boosts our immune systems. If you’re a runner, running has its benefits, too. WebMD reports that running not only provides greater cardio health, it also improves your sleep quality, memory, and mood.
Whether you reach your goal destination by walking or running, you’re aiming at the same target. Your motivation for walking vs. running might vary over the course of your lifetime — health, weight loss, training goals — and your level of engagement with the exercise might be extensive (think full marathon) or recreational (a two-mile walk on the marathon course). Switching from one to the other takes commitment and the willingness to change your mindset.
Mortgage borrowers’ journeys can vary just as greatly, as a purchase journey is very different, and more complex, than the refinance experience. Change is hard, and some lenders struggle with adapting to the borrowers’ purchase expectations, and frankly some originators don’t effectively transition to a purchase-centric model. In this month’s InFocus article, Senior Partner Garth Graham analyzes what makes purchase lending so much tougher and what lenders can do to prepare for the inevitable change to a purchase market. It’s another good Garth article, “Prepare Now for the Storms Ahead: Build Your Purchase Business.”
In his Borrower Experience article, Mike Seminari focuses on the importance of referral business as a key factor for revenue growth in a purchase market. Mike suggests three ways lenders can optimize the borrower’s experience to create “raving fans” who will refer their friends and colleagues to you for their loans. Check out “Are You Prepared to Meet the Purchase-Centric Market?”
Thank you for joining us this month, and please reach out to me or to any of the STRATMOR partners or principals for help preparing for the shift to a purchase market.
By Garth Graham August 2021
In the mortgage industry, we have survived a tsunami — in fact, we have ridden a wave of profits that the refinance tsunami gave the industry over the past year. Record volume and sky-high profits gave us enviable numbers while other industries struggled to survive the pandemic fallout. But I believe the refi wave is fading, and this article is about how to get a beachhead in the new purchase climate that we are heading into. (By the way, I live in Florida, so I have decided to torture the ocean analogies because it is better than the alternative headlines that Florida is nationally known for — to mask or not to mask).
There are storm clouds on the horizon, and those storm clouds are going to create a climate that will require lenders to compete more aggressively on purchase loans, which will have a major impact on the lender’s business. It’s not just that the refinance loans are going away and that there will be less total volume. It’s also that lenders are worried about how they are going to keep up their volume and their profit margins in a purchase market. So, why is purchase business so much harder to come by, and why do profit margins on each loan tend to be lower on purchase loans?
In this article I will outline what makes purchase lending so much tougher and what lenders can do to prepare for the inevitable change to a purchase market.
As lucrative as the mortgage business has been of late, if the latest forecasts are any indication, there are dry days shortly ahead. Now is the time for strategic lenders and originators to focus on growing purchase business.
STRATMOR Group offers a suite of data products and mortgage advisory services to power your performance–including industry-specific studies. Get the data driven advantage!
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