What Mortgage Brokers Need to Know in This Final Quarter of 2024: Should You Consider Returning to Traditional Loan Origination?

By Isaiah Lawson, Mortgage Industry Expert

As we enter the final quarter of 2024, mortgage brokers are navigating a market filled with both challenges and opportunities. Market conditions are evolving rapidly, and it’s crucial to stay informed and adaptable. In this article, I’ll provide insights on key trends, strategies for success, and discuss whether it may be time to consider transitioning back to a traditional mortgage loan originator role.

Navigating the Current Mortgage Market

The mortgage industry has been on a rollercoaster in recent years, with shifts in interest rates, production volumes, and the mix between purchase and refinance activity. Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks continue to feel the pinch, reporting a pre-tax net loss of $645 per loan originated in Q1 2024, marking the eighth consecutive quarter of net production losses. This is an improvement from Q4 2023, where losses per loan hit $2,109, but the path to recovery is still uncertain.

Mortgage Rates Outlook

One of the most critical factors affecting the market is mortgage rates. Experts predict that rates will continue to decline modestly for the remainder of 2024, with forecasts estimating rates to stabilize between 6.6% and 6.7%. This trend could rejuvenate both home purchase and refinance activities, and mortgage brokers need to be prepared to capitalize on this potential surge.

Increased Production Volume

While the market has faced challenges, there are positive signs on the horizon. Average production volume per company rose to $384 million in Q1 2024, up from $359 million in Q4 2023 . Although the increase is modest, it reflects a potential for growth. Brokers who stay agile and continue building their pipelines will be well-positioned to leverage this recovery.

Purchase vs. Refinance Market Shift

Currently, the purchase share of total originations by dollar volume stands at 85% . With rates falling, this balance may shift slightly as refinancing becomes more attractive, but the purchase market is likely to remain dominant. This dynamic makes it critical for mortgage brokers to maintain strong relationships with real estate agents and homebuyers.

Key Strategies for Brokers in Q4 2024

To navigate this evolving market, brokers need to adopt smart strategies that enhance both efficiency and customer engagement.

1. Embrace Technological Advancements

Technology has reshaped the mortgage industry, and brokers must leverage digital platforms to streamline their operations. Tools like AI-driven customer relationship management (CRM) systems, automated underwriting, and digital closings are no longer optional; they are essential for staying competitive. By embracing technology, brokers can reduce operational costs, improve customer satisfaction, and deliver faster loan processes.

2. Diversify Your Product Offerings

A diversified portfolio of loan products is key to meeting the needs of a broader range of clients. Non-QM loans, FHA renovation loans, and VA loans can help brokers stand out in a crowded market. Offering products tailored to different client needs allows brokers to capture niche segments, especially as the traditional conforming loan market tightens.

3. Focus on Customer Retention

With refinancing expected to rise, now is the perfect time to re-engage past clients. Building strong, long-term relationships ensures that clients return for future financing needs. Implementing loyalty programs, offering annual mortgage reviews, and personalized marketing campaigns can significantly enhance customer retention.

Pros and Cons of Returning to Traditional Loan Origination

Given the current market conditions, some brokers are considering a return to traditional mortgage loan origination. But is this move the right one? Let’s break down the potential pros and cons to help you decide.

Pros: Why You Might Consider It

1. Stability: One of the main benefits of working as a traditional loan originator is the relative stability that comes with a more predictable salary or commission structure. Many large lenders offer a fixed salary plus incentives, which can provide peace of mind during periods of market volatility.

2. Access to Broader Resources: Working with a traditional lender often means access to a wider range of products and support. From marketing resources to compliance assistance, loan originators at larger institutions usually benefit from a well-established infrastructure .

3. Less Operational Burden: Running a brokerage comes with significant operational responsibilities. A traditional loan originator role allows you to focus purely on client interaction and production, without having to manage business overhead.

Cons: Why You Might Want to Stay Independent

1. Less Autonomy: As a broker, you control your business strategy, partnerships, and client engagement. Transitioning to a traditional role may mean losing that freedom. You’ll likely have to follow corporate procedures and product offerings that may not align with your personal approach.

2. Earnings Cap: Traditional loan originators may face lower earning potential compared to brokers who can access a more diverse range of commission structures. For high-producing brokers, this could be a significant downside, as income ceilings are typically lower in traditional settings.

3. Brand Limitations: Many mortgage brokers take pride in building their personal brand. Moving to a traditional role may limit your ability to market yourself as an independent expert in the field. Instead, you may have to conform to a corporate brand, losing the personal touch that can set you apart .

## Conclusion: Should You Make the Move?

As 2024 draws to a close, mortgage brokers have a unique opportunity to adjust their strategies and thrive in an evolving market. Embracing technology, diversifying products, and prioritizing client retention are key to success.

When it comes to transitioning back to a traditional loan originator role, the decision ultimately depends on your personal goals, financial needs, and appetite for autonomy. For some, the stability and resources of a traditional lender are appealing. For others, the flexibility, income potential, and brand-building opportunities of being a broker will outweigh the perceived benefits.

In either case, the mortgage industry is poised for recovery, and those who stay informed, adapt quickly, and invest in long-term client relationships will emerge stronger heading into 2025 and beyond.

By following these trends and strategies, you can position yourself as a leader in the mortgage industry, regardless of whether you stay independent or explore a more traditional career path.

Isaiah Lawson NMLS #2037926

Mortgage Loan Officer | Real Estate Consultant | Business Strategist