As the mortgage industry continues to reduce capacity amid shrinking volumes, mortgage professionals are reluctant to spend on tech, services or solutions.
According to HousingWire‘s Q3 2023 LenderPulse survey, industry workers said they would cut down on marketing spend and tools, as well as reduce additional headcount, if they had to further contain costs.
About 57% of 166 respondents in the LenderPulse survey do not plan to invest in tech, services or solutions.
The rest of the surveyed professionals were evaluating or planning to purchase lead generation services, loan originations systems including Encompass and Arive, customer relationship management (CRM) and services that maximize repeat and referral business for lenders, such as Homebot.
While the respondents were split as whether to invest or hold spending money in tech, when asked about what business cost reductions they plan to make in the future, roughly 39% of surveyed mortgage professionals pointed to cutting their marketing spend/tools.
Just under 25% of the respondents said they would cut down on production or origination focus headcount, followed by operational software and solutions (18%); and originations software (8%).
Other responses included cutting down excessive incentives, business trips, open houses and sponsorships.
LenderPulse requests surveys from 24,000 mortgage professionals across the country on market trends and lender opportunities and challenges. Of the 166 completed surveys, 31.9% of the respondents were from the Southwest; 19.28% were from the Northeast, Southeast and Midwest; and 10.2% were from the Northwest. Conducted from June 1 to June 16, HousingWire LenderPulse is a forward-looking quarterly survey.
Mortgage business outlook
Interest rates, loans falling through and lead generation were the three biggest challenges mortgage professionals expect to face in the third quarter out of 11 factors —including lender stability, staying motivated and relationships with Realtors.
Other factors, such as the competitiveness of mortgage products, staff cuts decreasing the ability to close loans, and regulations were recorded as the least concerning.
Amid an elevated rate environment, 50.6% of surveyed mortgage professionals projected that their purchase mortgage originations will remain flat in the next three months while 32.5% of respondents said purchase volume will rise more than 5%. About 17.4% expected purchase origination to drop by more than 5%.
The expectation of purchase mortgage volume was in line with where industry workers’ expect mortgage rates to head in Q3.
About 44.6% of respondents said interest rates will remain flat; 31.3% believed rates will go down; and 24.1% projected rates to go up.
While the Federal Reserve maintained the federal funds rate in the 5% to 5.25% range in June, the central bank is expected to further raise rates. Speaking at the House Financial Services Committee last week Fed chair Jerome Powell noted that the economy is a “long way” from low and stable inflation.
Roughly 44% are neutral about the economic climate in the third quarter of 2023 while about 43.4% are pessimistic and 12.6% are optimistic.
If you have questions about LendingPulse email RealTrends Editorial Director Tracey Velt at tracey@hwmedia.com. Also, be sure to sign up for LendingLife, a newsletter for mortgage professionals focused on important data and popular industry trends, and the new Data Digest newsletter, a weekly breakdown of news, tips and strategies for success.
