It's been nearly eight years since mortgage rates dropped below 5% for the first time, providing an opportunity for the vast majority of homeowners to refinance out of higher-rate mortgages. While it's difficult to predict when this run will end, many signs indicate rates will rise in the not-too-distant future. When that happens, mortgage lenders will see more of their loan volume come from purchase originations, says John Robbins, co-founder of the Mortgage Collaborative and a former chairman of the Mortgage Bankers Association. Here's a look at 10 steps lenders should take now to stay profitable when the market shifts.
Know the Numbers
Mortgage banking is a manufacturing operation. Therefore, it is critical to know the precise costs and time required to move a mortgage through every step in the loan origination process. Since a reduction in margins and mortgage volume is predicted for 2017 and 2018, knowing exact costs and turn times will help lenders become more efficient and maintain profit margins.