Looking Ahead: Refi window still open for a while, but focus on purchase business in 2020!

By Anthony Casa, Chairman of AIME

There’s good news for independent mortgage brokers as it pertains to loan volume as we head into 2020 – but there are also some very real market shifts ahead that we need to be prepared for.

The heavy volume of refinance business both brokers and lenders have been able to enjoy over the past year due to low-interest rates will continue to provide a solid foundation of business for the first three months of 2020, with a significant drop-off looming in the second quarter and beyond, according to economic forecasts by the Mortgage Bankers Association.

 But here’s the reality you need to understand: mortgage brokers need to continue to put an emphasis on purchase business. No matter how low, or high, interest rates are at any given time, brokers’ key advantage will come on the purchase side.

 The MBA’s forecast shows a decrease in loan volume altogether in 2020 compared to this past year, with an especially sharp drop in refinance volume. Later in 2020, we could see refinance volume only make up approximately $100 million of the market – compared to it making up roughly $350 million of the market in Q4 of 2019.

That’s a steep drop – and with mortgage brokers fending off retail competitors for their piece of an already-smaller pie, it’s easy to understand why a focus on purchase business is critical. Refi volume will drop, lenders will chase a smaller number of loans, and margins will get thinner.

We continue to preach investing in your business by hiring dedicated resources focused on database management and customer retention. Retaining our customers is and will continue to be a top priority, but staying purchase focused and continuing to grow our referral sources is how mortgage brokers achieve 50% market share again.