LenderPulse Q1 2024 survey: LOs are increasingly optimistic about the origination landscape

The Federal Reserve's potential interest rate cuts have shored up confidence in loan originators' prospects for mortgage origination, housing market

The Federal Reserve’s much-awaited signaling of interest rate cuts in 2024 has made mortgage pros more optimistic about the origination landscape. 

About 47% of mortgage pros said they anticipate purchase mortgage origination volume going up in the next three months in their respective markets, according to HousingWire’s Q1 2024 LenderPulse survey.

Some 36% of respondents believe purchase origination will remain flat while 17% expected it to drop in the next three months.

The results reflect mortgage professionals’ confidence for an improved quarter compared to HousingWire’s previous Q4 2023 LenderPulse survey when only about 19% of surveyed respondents projected purchase mortgage units to rise by more than 5% during the period. 

In its latest survey, more than half (55%) of the respondents said interest rates will trend down in the next three months. About 43% of mortgage pros said rates will remain unchanged and 2% anticipated rates to increase.

The improved sentiment follows fresh economic projections from central bank officials in December that showed rates would be slashed to a median 4.6% by the end of 2024, suggesting three 25 basis points (bps) cuts from current level between 5.25%-5.5%

The Federal Open Market Committee members penciled in interest rates falling to a median 3.6% in 2025 and projected rates to fall below 3% by the end of 2026.

Mortgage pros pointed to interest rates as their biggest challenge.

Lack of housing inventory and relationships with real estate agents followed as their main challenges over the next three months.

Roughly 41% of respondents are neutral about the housing market in Q1, while 38% are optimistic and 21% are pessimistic and 14.1% are optimistic.

Of the 157 completed surveys, 30% were from the Southwest; 23% from the Southeast; 20% from the Northeast; 16% from the Midwest; and 11% from the Northwest. The survey was conducted from Nov. 23 to Dec. 22, HousingWire LenderPulse is a forward-looking quarterly survey.

Effects of commission lawsuits not felt yet

While commission lawsuits rattled the real estate industry in 2023, homebuyers haven’t made inquiries about the topic, the majority of the mortgage professionals responded.

One respondent said: “(The topic) Hasn’t been brought up by buyers yet and there’s a lot of uncertainty as to how it will ultimately play out.”

“If an inquiry is received, the response is, this will be years before being finalized and any questions they have should be directed to their realtor and legal counsel,” another mortgage professional said.

Most of the respondents are taking a ‘wait and see’ approach as it could take years to see any impact of commissions on buyers and sellers.

“I continue to advocate for the value of the agent and working with them as a partner. When we see the changes materialize we will counsel buyers around this and inform them of the options,” said a respondent.

About 60% of mortgage pros said they have not made adjustments to their referral partner strategy in response to the real estate commission lawsuits.

“We continue to work with listing agents as referral partner relationships (existing and development). We have developed, maintained and focused on this listing agent referral source for a long time, so this is not an adjustment, just a greater prioritization,” another respondent said.

Other mortgage pros said they are working on more direct lead generation to focus on consumers rather than realtors.

“We are spending less time focusing on agent relationships and spending more time/effort on other partner options like existing members, finance professionals, etc,” a mortgage professional said in HousingWire’s LenderPulse survey. 

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