For years, we’ve enjoyed historically low interest rates, but those days seem to be over. As of this writing, the benchmark 30-year fixed-rate mortgage is inching toward 5%, while the Fed seems poised to raise rates several more times in the coming year, which threatens to put a damper on home sales.
Before panicking, understand there are things you can do to keep business flowing — but it may take some effort and extra work on your part. Here are three keys to being a successful mortgage loan officer when rates are heading north.
1. Sell Homeownership First
Right now, many potential homebuyers are sitting on the fence and getting very nervous about rising rates. Some are debating whether to put off buying their first home. That’s understandable, but it may not be a wise move depending on the potential buyer’s financial goals.
Over the long term, real estate has proven to be one of the safest personal investments consumers can make. Let your clients know that buying a home is an investment in their financial future and an opportunity to build long-term wealth.
If you have a prospect who seems to be on the fence, ask them this: Will you be comfortable passing on buying a home today if home values continue to rise? How much more money will you spend on rent that could have gone toward building equity? Let them know that if rates go down in the future, they can always refinance and lower their monthly payment.
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2. Focus on Service
In any rate environment, lenders and mortgage professionals are defined by the service they provide. Make sure you are providing the best possible service to your customers — and by your customers, we mean your borrowers and your real estate partners.
Take time to build deeper relationships with everyone in your network. Get to know what your customers like to do in their time off and what things they care about it. Commit to being of service to everyone you meet and do something to make their experience easier. Try not to be singularly focused on sales — focus on the relationship first, and the rest will follow. Even if someone is not ready to buy a home, they may refer you to someone who is.
A great strategy is to partner with real estate agents for co-marketing campaigns and to hold open houses together. If your company provides free marketing materials to use for such activities, be sure to use them!
Another great way to provide excellent service is to respond quickly to every request for assistance. Remember, today’s borrower has plenty of options, and they are more likely to go with the lender who responds to their needs the quickest. That means leveraging social media and CRM technologies your company provides to make sure you are reaching customers before they can think of anyone else. For example, Embrace provides borrowers with a mobile app they can use to track their loan process, which helps our loan offices to focus on relationship building and less on administrative tasks.
3. Expect to Work Harder
Don’t be mistaken: rising rates can have an effect on volume, and a tough market is not just tough on you — it’s tough on everyone. The mortgage business has always been cyclical in nature — there are good times and not-so-good-times. The hard truth is that when the market gets tough, you may have to work harder and earn less. This is something all mortgage professionals should be prepared for. But if you want long-term success, you have to find a way to stay in the game.
Obviously, your choice of a lender can play a huge role in your ability to weather a rising interest rate environment. If you are thinking about finding a new home for your business and would like to know what Embrace has to offer, drop us a line at pMullen@embracehomeloans.com