In a bad mortgage market, these are areas of opportunity for lenders

Mortgage inquiry and rate-and-term mortgage alerts declined in Q2

Home listings grew, credit scores improved and tappable home equity increased in the second quarter of 2022 from the first quarter. Those the three areas represent an opportunity for lenders grappling with a deeply challenging mortgage market, Sales Boomerang said in its second quarter mortgage opportunities report.

Sales Boomerang reviewed data from more than 170 residential mortgage lenders that use its platform to monitor millions of customer and prospect records. The mortgage tech firm then calculated and compared the aggregate frequency with which those contact records triggered loan-opportunity, prescriptive-scenario and risk-and-retention alerts during the first and second quarters of 2022.

“New home listings and cash-out alerts both trended upward in the second quarter, making purchase and home-equity products smart areas of investment for lenders as they prioritize assignment of limited resources,” said Mike Spotten, executive vice president of product at Sales Boomerang. 

Of the total monitored contacts, about 1.44% of contacts were new listing alerts, up 69% from the first quarter. More than 4% of monitored contacts were credit improvement alerts, an increase of more than 130% from the previous quarter. 

The significant quarter-over-quarter increase illustrates that Americans’ overall financial status was improved by pandemic-related fiscal measures, including government stimulus payments, tax credits and student loan moratoriums, the report said. 

Meanwhile, the second quarter saw a decline in mortgage inquiry alerts, rate alerts, and rate-and-term alerts, a predictable result at a time when interest rates are discouraging rate shopping and refinances.

Prioritizing home equity solutions in a rising rate environment

The 2022 housing market has been underscored by interest rate spikes and refi decline and lenders are working hard to adjust to new borrower trends. HousingWire recently spoke with Barry Coffin about the ways lenders can capitalize on these trends by revving up their home equity solutions.

The mortgage inquiry alert was down 28.6% from the first quarter and rate alert dipped 40%. Rate-and-term alerts also fell 49% in the second quarter from the previous quarter. 

As a result of rising interest rates, the value of mortgage servicing rights continues to grow. The report added: lenders must carefully weigh the pros and cons and potential balance sheet impacts of retaining versus selling mortgage servicing rights. 

Last week, mortgage application volume reached the lowest level since 2000 due to a weakening economic outlook, high inflation and affordability challenges, the Mortgage Bankers Association (MBA) said. 

According to MBA, the overall mortgage production in the U.S. is expected to drop more than 40% this year from 2021. Of the $2.4 trillion origination volume expected in 2022, only $730 billion, about 30% of the total origination, are projected to account for refis.

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