Residential lenders, whether depository banks, credit unions, independent mortgage banks, or brokers, were always concerned with when refinances would dry up. Per the MBA’s application data, refi percentages of total locks are down in the 20s, meaning that more than 70% of apps are for purchases. Lower volumes and margin compression is still the name of the game here in the summer of 2023. So now what?
Practically everyone benefited from a solid 2020 and 2021. Years’ worth of volume and income were crammed into those years, and now lenders and originators are paying the price. For lenders and vendors to have spent all their income on compensation and benefits for employees or owners during those years would have been near-sighted.
Certainly, lenders “took chips off of the table” but many reinvested profits back into their companies, whether it was in signing or retention bonuses, new technology to help the manufacturing process, increased warehouse lines, or expanded business channels.
The business environment has changed. For lenders to be able to create, find investors for, and roll out new products is critical. As 2022 wound down and into 2023, “old” products were rolled out. Buydowns, for example, are a critical part of any lender’s arsenal. Basic VA loans are widely used for home purchases.