After updating attendees with the status of the industry in a speech marked with the typical inventory drought and ever-rising interest rates, Michael Fratantoni, chief economist and senior vice president of research and industry technology with the Mortgage Bankers Association, concluded his presentation early Tuesday morning with a call to action for everyone attending the mortgage technology conference.

The request, in essence: Be the change agent the industry needs in order to remain profitable.

Fratantoni set up his update on the economy by outlining the main two factors holding the mortgage industry back.   

1. Demand

Due to the jump in mortgage interest rates, people are reassessing what they can buy.

2. Inventory

There is a frantic shortage of inventory across every market. The kind of stories you hear about in San Francisco about multiple bids on homes is happening everywhere, even the Midwest.

The roadblocks are great enough that Fratantoni noted that the MBA’s purchase forecasts might have been a little aggressive this year.

Looking at the MBA’s original forecast for 2017, it estimated about $1.63 trillion in total mortgage originations for the year, significantly down from $1.89 trillion in 2016.

And to make the mortgage industry even more difficult for those in it, the cost to produce a mortgage is increasing.

Fratantoni stated that if people look at the cost to produce a loan a decade ago, it was around, $4,000, and now it’s around $7,000 and $8,000.

Some of this increase is due to regulatory changes, he noted.

So how can the industry bring the cost to produce a mortgage down, especially since the profit margins are looking so slim?

Fratantoni explained that there isn’t a lot that can be done on the revenue side.

Instead, he said that it would have to be done by tackling some of the costs.

This is where the call to action happens. Fratantoni laid out these facts before the MBA’s National Technology Conference and Expo 2017. This is the same group of people paving the way forward for technology in the mortgage industry.

Fratantoni explained that there are rising costs and diminishing profit margins. However, he said, “Everyone here is the answer to this.”

It’s on the people in the industry, through technology, to find ways to increase production and lower costs in a cost per unit perspective, he explained.

And to bring more incentive to the call to action, there is a positive side to all of this.

Fratantoni reminded the audience that there is still about a decade until the market reaches its peak for when all the first-time homebuyers (Millennials) will reach the market.

A quick walk around the conference will show that the industry is ready and exited to step up to the plate, as automation and innovation quickly become a priority for the industry.