LaDonna Lockard: I'm here today with my favorite guest, Brandon Christensen, director of education and national instructor here at Maximum Acceleration. It's good to have you back as always. How are you, my friend?
Brandon Christensen: I'm doing really well. It's always a dream to be here with you.
LL: We've been on the road a ton, and we've been chatting with different loan officers in markets across the country. What are you seeing right now with the market as a whole, and what are LOs talking about right now?
BC: I'm seeing a lot of what I would interpret as misinformation out there. And I think that's a natural reaction to a change in the market, coming from where we've been, in a high interest rate environment to potentially a lower rate environment, and there's a lot of excitement and desire to get people interested in doing loans again.
LL: We know the Federal Reserve cut its benchmark interest rate by 50 basis points in mid-September. So what does that really mean for mortgage rates?
BC: The reality of the situation is the bond markets have already baked in the Fed's cut to the Fed funds rate. And if you look back over the last year, I want to say rates peaked in October of 2023, at right around 8%. We're already almost a full two percentage points lower than that peak. So rates had already, in large part, come down. So I don't anticipate that the Fed funds decrease is going to dramatically impact or influence mortgage rates. I don't think it's going to do a lot in the market.
LL: Why do you think we have been seeing some ups and downs in rates and the market as a whole recently?
BC: Well, there are a lot of factors at play right now. LaDonna, you told everybody that I'm a nerd, and I certainly am. I will research just about anything. It doesn't have to be just mortgage-related, and there are some things happening overseas in Japan and Korea, specifically, where their economies are facing some unique challenges. And because of that, because of their low interest rate environment, people have been borrowing money from the banks in Japan and then taking those funds and investing them in other markets. And because of the nature of the global economy that we live in, when an economy the size of Japan's faces some challenges, it's going to be felt by everybody around the world.
LL: With the rate cut, there’s a lot of chatter going on about potential refinances. What is the type of conversation that you would be having with your borrowers right now?
BC: We're in a really good position to have conversations with our borrowers about potentially refinancing, or at least taking a look at their current mortgage situation and seeing if the decrease in interest rates will make sense for them from a financial perspective.
But, you know me, Ladonna. I think the conversation I would be having is one that's centered on education. And that requires us as loan officers to educate ourselves so that we can educate our partners and our clients, so that everybody wins. Education always wins because you can bring value through it, and education helps everybody make better decisions. What I would encourage loan officers to be learning about and then educating their sphere about are the opportunities that exist in the market right now.
However, I'll be the first to tell you, I'm not doom and gloom, but even if interest rates continue to come down, I think we're facing a challenge as loan officers.
LL: Tell me, what is the challenge you think lies ahead for LOs?
BC: There's something going on behind the scenes right now that I don't think a lot of us realize, and it’s happening with the mortgage servicers of the world. There are some big ones out there like Mr. Cooper and loanDepot. Even Rocket Mortgage holds a pretty healthy mortgage servicing portfolio. And what we're noticing is that the recapture rates, as have been recently reported by these large servicers, are approaching 80%. That's dramatically higher than we've seen previously. Historically, you're typically somewhere in the 20% range.
So as loan originators in this market where we might see some potential refinance opportunities, our biggest competitor is going to be the servicer. And the servicer knows how to get directly to the consumer. They know how to stay in front of the consumer. They know how to remind the consumer who they are. They're sending them a monthly invoice, and the consumer is logging on to their website to make payments and interact with them. And you better believe that these servicers are spending money on technology to get in front of these borrowers on their CRMs — they're using AI, they're communicating better, they're leveraging credit monitoring to see where the consumers are at with their credit scores. So my message to loan officers today would be, find a way to be relevant to your consumer right now at this moment.
Even though you're advertising to your client that rates are going to come down and that there will be an opportunity, my challenge to you would be, how do you create that opportunity today? I think there's actually a lot of opportunities in the current market that we're just not paying attention to.
LL: I cannot think of another expert in this industry who stays so on top of things. Thank you so much for your insights, and I can’t wait to have you back for more updates.
Enjoy more conversations like this one, watch Maximum Conversations in Minimal Time with host LaDonna Lockard, exclusively for NMP.
