Mortgage Connects an MGIC Podcast
On Mortgage Connects, we explore the minds and experiences of mortgage industry and lending innovators to bring our audience candid viewpoints on critical mortgage industry developments and influential insights about the unique challenges that lie ahead. Our hosts interview top mortgage professionals and thought leaders across the industry – from proven LOs to established CEOs – who have wide-ranging expertise to provide the best insights into market trends, best practices, marketing and referral strategies, training opportunities, and the future of the mortgage industry.
Mortgage Connects an MGIC Podcast
2023 Loan Originator Survey Report: Mortgage industry trends revealed
Uncover vital mortgage industry insights with Loan Officer Hub Editor Liz Keuler as we dissect the findings from MGIC's 2023 Loan Originator Survey Report. Learn how loan officers are capitalizing on opportunities and tackling challenges in today's mortgage market. From factors that influence loan origination to current market activities and unexpected trends, we reveal insider strategies that can help you build your referral relationships and reach the next generation of homebuyers.
See the Loan Originator Survey Report results for yourself at LOHub.com!
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Welcome to Mortgage Connects by MGIC, bringing you the latest insights from top mortgage professionals around the industry. I'm your host, Stephanie Budnick, and joining me today is Liz Keuler. She's the editor Loan Officer Officer Hub and MGIC's site that is dedicated to insights and tools for loan officers. Liz, thanks so much for joining us today. I'm so happy to be here. I'm really excited for the topic at hand. You're going to provide with exclusive insights on the latest Originator Survey conducted by MGIC and Loan Officer Hub. I understand that this is the third year that we've done this and the loan officers that were surveyed, that we talked to their colleagues about their challenges, opportunities and activities. So let's talk about the survey in general. Can you tell me again who has participated in this?
Speaker 2:Sure. So we conducted the survey in June. That's the usual time of year where we do this and it always takes us a couple months to tabulate those results and really dig in. We had about a thousand originators this year, which is down from last year, probably because there are fewer loan officers in the market, I think. So we mostly had loan officers or a few branch managers or sales managers in there. We're always looking for anybody who does any kind of origination to just kind of see what they're thinking about the market and their activities. So we had like pretty good tenure.
Speaker 2:63 percent have been loan officers for at least 16 years. This is not surprising, but it's a slightly older group. 66 percent are over age 50. About a third of them are mortgage bankers, 22 percent work for banks, 15 percent brokers, 14 percent community banks and then 10 percent credit union. And I just wanted to level set there. That doesn't mean necessarily that those particular groups are always representative of the average loan officer. That's who we had take the survey. And then we also asked this year about production. 28 percent said they do at least 76 loans in an average year, with an average annual production just over $16 million. But not surprising, maybe, for this year. 72 percent said they expect to end the year significantly or slightly lower than their average. So we asked about their average. But we also asked them well, do you think you're going to hit that this year? And it seems like a pretty resounding not likely.
Speaker 1:Yeah, there's been a lot of adversity in the market this year for sure, so what you've shared so far doesn't surprise me too much. Now, we talked about this being the third year. When you compare that year over year to other results, is there anything that really stood out or surprised you?
Speaker 2:You know, the answers generally are not too surprising. They kind of meet with what you anecdotally hear from loan officers in the business and in this market. The one thing I was surprised is that we did ask, as I said, about production and annual number of loans this year, which was new. And the reason we asked about that is we were hoping to kind of slice and dice that information and see if there was any difference in the answers for those that you could consider top producers versus maybe average producers, because that would really might yield some interesting insights. But for the most part we didn't see a lot of differences in the answers and I think that speaks to the fact that there's no like secret to the business or silver bullet that just you know if you do these activities you're going to become a top producer. It's just putting in the work.
Speaker 1:Sure, showing up everyday.
Speaker 2:That's okay.
Speaker 1:Yeah, so you know that might be a slightly disappointing answer for loan officers to hear that they're not going to get the secret.
Speaker 2:But although it surprised me then when I thought about it a little more, it does make sense. It's just you know, those folks are being successful just putting in the work.
Speaker 1:So those loan officers that are putting in the work, where were they targeting their outreach?
Speaker 2:As usual, top focus was purchase business for the first time home buyers and move up buyers. So there's not a big surprise there. That's, you know, bread and butter for the business. Where we really saw the market come into play was that it was a very sharp dip in a refinance focus compared to last year's survey. Refinances for existing and new clients. They both dropped like 20 percentage points compared to the 2022 survey. So people were really focusing more on the purchase business.
Speaker 1:That dip surprises me just a little bit, just because it was already going down in 2022. So that catastrophically, year over year, I mean that's a little surprising.
Speaker 2:Sure, I think it has something to do with when we surveyed the loan officers, you know. June last year is right Sure it wasn't quite then. Yet, right, it's good to talk about yeah, so I think that's why.
Speaker 1:So when you're looking at marketing medians because we were talking about you know where they're targeting their outreach. What medians were the most successful for them to reach their borrowers?
Speaker 2:So top answer and this is always true word of mouth, which could also be considered referrals 88% of respondents selected that. And then emails and social media came in like lagging second and third 35% for emails and 33% for social media. So you know vast majority of loan officers. They're really they're talking to the referral partners, they're talking to past clients. You know that there are different tactics that loan officers use to reach past customers and referral partners.
Speaker 2:It was interesting to see what people would answer. You know, when we leave an open field like they'll maybe select a few different things, but when they'll get to the other, we heard the importance of business networking, international chapters or other networking opportunities as places where loan officers are finding those referral partners. And then we also asked them specifically about reaching the next generation of buyers, so younger, millennials and Gen Z, and social media of course came up often for that group, but also some creative ideas I hadn't really seen before, like attending all-ages functions and specifically targeting Gen Z and millennial real estate agents as referral options, which I think makes a ton of sense because Gen Z real estate agents are probably working with Gen Z clients a lot of the time, because that's where their network is.
Speaker 1:Right, work with people that are more like you, because of the comfort sometimes.
Speaker 2:Sure your network. You know who's in your network.
Speaker 1:Right. And I like that you brought up networking. It's just. It's bringing home just the importance of being in front of people and making connections, and that's how it grows through your word of mouth. So that makes sense. You brought up referrals. Let's talk a little bit more about that. Who are those individuals that the loan officers are working so closely with to generate referrals?
Speaker 2:So we did ask LOs about their best referral sources. Past clients and real estate agents were neck and neck. That was about 85 percent of loan officers selected that. Friends and family was also a popular answer. So it's clear loan officers are leaning on like any network they can. Builders, cpas and lawyers were less popular overall, but it seems that more seasoned LOs so those who have been in the business longer have more diverse referral sources. They're just more likely to select three or more of those options instead of just leaning on the past clients and the real estate agents. So that might be a tip for some loan officers who are thinking about how to diversify. Is diversification can really help if you're looking to different sources and see if you can develop those?
Speaker 1:Yeah, there's always unique windows that people don't always think about. Referrals are obviously continue to stay on top for multitudes of reasons, but expanding their networks could be worthwhile. Did you learn anything about the survey from the survey on how LOs are connecting with real estate agents specifically?
Speaker 2:Mm-hmm. So 40 percent of loan officers say they attend closings at least once a week. And interesting there, that's one of the only places where we did see a significant difference in the answers from LOs who did 76 or more loans so it could be considered top producers is that a greater percentage of them 55 percent of those loan officers say they attend closings once a week. So maybe there is a little bit of a tip in there. If you're talking about top loan officers is closings. It seems to be important.
Speaker 2:As I mentioned, networking events, along with community events, continue to be popular ways to connect lunches, happy hours, any of those places where people can connect not just on a business level but person to person, and then hopefully develop that relationship and turn it into a relationship where you can get that referral. And then, as far as what's most important to those real estate agents, 91 percent of loan officers say that service and availability are the most important thing when you're working with those referral partners. One loan officer, in his or her comments, put it perfectly, said you have to keep your promises. So that seems to be a theme in general. Whether it's working with borrowers or working with referral partners, you know you have to do what you say you're gonna do, sure.
Speaker 1:Now we talked about the market a little bit in the beginning and how. That's maybe perhaps swayed some of the answers from inventory standpoint and other challenges that are going on. What did you learn about how LOs are dealing with these challenges?
Speaker 2:Well, as I said at the beginning, 82% of originators expect to end this year at least somewhat below their average production. So there's plenty of concern about staying in the business, getting back on track. To be clear, getting back on track seems to refer more to pre-pandemic levels. You know loan overs are not expecting a return to the kind of business that the mortgage industry was doing in 2021, for example, so they're just trying to get back to maybe like their normal.
Speaker 2:One thing that did surprise me about challenges in the market is I really expected interest rates to be the main story on all of those questions about challenges, but the biggest roadblock seems to be inventory.
Speaker 2:83% of respondents said that inventory is one of the greatest challenges for their borrowers and 66% said it was the greatest challenge for them. So you know interest rates. You hear so much about it, but we also know the historic you gotta put it in the historic record too is that they may seem really high now and they are at kind of a historic high for a certain period of time, but when you look back at the whole housing market you know 7% is not the top of where it's ever been. So that might be one of the reasons. We are in a really tight inventory place right now and that seems to be the biggest challenge. But, that being said, interest rates did rank almost as high on the list of challenges to borrowers, at 72%, and we included as an option this year mortgage payment or affordability, and that jumped up 30 percentage points from last year, coming in at 63%. I think you can really relate that to the interest rate challenges as well.
Speaker 1:Sure. So those two answers almost kind of go simultaneously together. It's easy to complain about an interest rate, because when they can't find a home they're like do I wait, do I go? But it's really that inventory that's keeping people where they are right now. So MGIC is a mortgage insurance company and we couldn't miss an opportunity to ask loan officers how they feel about low down payment options. I'm sure so, with both of us working here at MGIC, what kind of things did we learn?
Speaker 2:Yeah, we had to ask them. You know, come on, we can't miss the opportunity. Well, no. So I'm sure everyone here at MGIC will be gratified to learn that 83% of loan officers say that a conventional loan with PMI is among the products they use most often with consumers who need a low down payment option. So you know, we kind of listed the whole gamut of what they might offer and conventional loans with PMI did come in number one at 83%. Those other options, of course, included FHA, DPA, va, usda. So we also asked loan officers how do you decide what to recommend to your consumers of those options?
Speaker 2:And we leave that as an open answer because we just really want to see the thought process for loan officers and I love reading these answers. There's no big surprises, but they just reinforce the importance of the loan officer's role as like a trusted advisor, helping guide borrowers through the process, understand their options. So like, if you think about a word cloud which actually, you know, the survey option allowed me to do so I can see that word cloud. I saw words like options, compare, needs. Those were like the really big words. So loan officers know there's no one size fits all, so they're taking that role as a trusted advisor seriously and all of those answers are like you know, I figure out what's best for their individual situation. They're not just trying to slap on you know, whatever loan they do the most often and I think that's really inspiring to see, even in a difficult market like this, that loan officers are taking that opportunity to really guide their borrowers.
Speaker 1:Yeah, that's comforting for them to be able to do what's best for their borrower not necessarily just for them, as an individual, because they know what a big buying process this is, and they don't do it every day.
Speaker 1:That's right. I really appreciate, Liz, your time today. I love some of the insights that you were able to share with us. There's many more, I'm sure, in the LO survey that will be coming out. The surveys have provided great insights to what originators are doing, and so, for additional information and a copy of the survey, visit loanofficerhub. com. Thank you all so much for listening. For all the latest industry insights, subscribe Mortgage Connects Connects on Apple Stitcher, google Podcasts, Spotify, amazon Music or go to mortgageconnects. com.