What the Fed Rate Cut Means for Mortgage Loan Officers
09/27/2024
Mortgage loan officers have been on a long trek across the desert and finally see an oasis with the Federal Reserve’s recent announcement cutting rates by 50 basis points. The rate cut doesn’t directly impact mortgage rates, but lenders know the anticipation of a cut has positively impacted mortgage interest rates and astute lenders are preparing for a long-awaited positive shift in the housing market.
Mortgage Bankers Association SVP and Chief Economist Mike Fratantoni weighed in on the Fed’s decision.
“Mortgage rates likely had this cut – and this expected rate path – priced in, and lower mortgage rates, now close to 6%, have resulted in much more refinance and some additional purchase activity in recent weeks. We do expect that if mortgage rates remain near these levels, it will support a stronger than typical fall housing market and suggest that next spring could see a real rebound in activity,” said Frantantoni.
While the size of the cut came as a surprise, mortgage rates have been on the decline with the Fed hinting at a cut this year. The mortgage market outlook following the fed rate cut continues to be more positive. Loan officers should be asking themselves - Are you prepared to take advantage of this monumental shift? Have you been spending the last six months planning out your strategy once rates drop? If your answer is “YES”, congratulations! You’re probably in the minority. If you haven’t been focused and planning, you’re not alone. Human nature is to wait until something happens to act or react.
5 Tips for Mortgage Loan Officers After the Fed Rate Cut
Regardless of which camp you’re in, most mortgage loan officers spent the last two years praying and hoping for an improvement in the market and here it is. Whether you have been preparing or just waiting, here are five things to do now.
1. Identify your borrower targets. Work efficiently to pinpoint the borrower prospects and existing clients in your database that make sense to contact. Filter down your priority opportunities. Don’t waste valuable time focusing on the wrong targets.
2. Connect with your real estate agents and other referral partners. Target the partners who would benefit most from guidance and expertise on the shift in rates and how this will impact opportunities they are chasing.
3. Tailor your communication approach to your target audience. Understanding how your targets communicate is critical. Do they prefer phone, SMS, email, Zoom call? Maybe all of the above. You may only get one chance to reach your prospects so make sure you’re using the right communication tools. This is not the method you favor, but the method(s) your targets use.
4. Add value by educating your audience. You are the expert. Chances are your borrower and partner contacts do not fully understand your business or what the Fed rate cuts may mean for them. Focus on educating at an individual level. Ensure your education efforts and messaging are relevant to the individual. Providing personalized service shows them you are interested and helps build trust with borrower prospects, clients and partners.
5. Nurture and invest in your audience. This is NOT a “one and done” exercise. Prepare to spend time sharing your “value added” with your audience. Reaching out multiple times and in multiple ways increases the likelihood of your success. The best way to do this is to get into a routine of daily calls, regularly scheduled emails/SMS, and getting the word out.
Top producers become such because they understand the importance of nurturing relationships. Personalized attention addressing specific needs generally wins the day. Most lenders will stop after the 1st or 2nd outreach attempt. The most successful loan officers realize it’s not a sprint, but a marathon, and commit to this mindset and the process.
A mortgage lender combining the right touch in terms of knowledge, know-how and personal engagement and the benefits of technology will be ready to capitalize on business opportunities. One of the best technology tools is a customer relationship management (CRM) system, like Nextwave CRM, tailored to meet the needs of mortgage professionals. The right mortgage CRM drives growth through centralizing data, streamlining and automating workflow processes, increasing efficiencies and enhancing customer relations.
The best news in all of this is not just that if mortgage lenders execute the plan they will reap the rewards of capitalizing on the opportunity that the market is offering and may just find a new groove for approaching the road to winning regardless of what rates are doing. In the mortgage lending industry one thing is for sure, rates will always be going up and down and up and down. Lenders only have control over their own groove and and strategy for achieving excellence in whatever the market offers.
Read more in our recent blog, “10 Tips for Mortgage Lenders Preparing for a Better Housing Market. If you are committed to taking a pro-active approach for the coming wave of opportunities, let’s see if we can help you take the next steps to success. Schedule a call with us.