Right now, many lenders are finding that past game plans simply aren’t enough to combat current conditions. Instead, they’re looking towards outside-the-box ways to capture market share. Not only will these strategies help to support profitability in today’s low-volume environment, but they’ll open up new revenue possibilities when the market inevitably recovers.
Today’s market represents a natural, cyclical downturn, but is also unique for a few important reasons:
- Most Americans today face unprecedented barriers to homeownership. Sharply rising interest rates, historically high housing prices, and a workforce that doesn’t necessarily fit into traditional W-2 parameters have created a climate where the traditional “American dream” feels out of reach for many demographics.
- Technology partners now exist to bridge the gap between lenders and underserved borrower markets. To connect with more borrowers, lenders need to expand their offerings. Previously, launching new loan products and channels required heavy operational lift, costly infrastructure, and time-consuming process setup. That reality is changing. With the rise of all-inclusive solutions offering fast, simple ways to launch consumer-direct channels, non-QM products, and more, lenders can flex more nimbly to borrower needs.
Together, these trends create new possibilities to capture market share. By leveraging strategic partnerships, lenders can capitalize on borrower demand where it exists in the current housing and economic environment. Maxwell Private Label Origination, for example, offers a full suite of modern software and nationwide infrastructure to easily launch products, channels, or geographic expansions from scratch. Leveraging solutions like these, lenders can access the agility necessary for success in an increasingly competitive marketplace. Plus, gaining market share in new areas will ensure lenders are well positioned to thrive as the market turns towards its next upswing.
How lenders can prepare for 2023’s market
No one knows exactly how the mortgage market will behave in 2023. What we do know is that the next wave is coming. Rates will subside, home prices will fall, and power will shift from sellers to buyers. As volume returns, lenders will find themselves in a familiar upswing. And while that upswing will provide relief in the form of cash flow and revenue, it will also lull many lenders into a false sense of financial security, only to be disrupted by the market’s next downturn.
Entering 2023 with a survival mentality will only perpetuate a vicious cycle of feast and famine. For most lenders, the past six months have centered around hard decisions related to right-sizing staff, cutting resources, and preserving budgets. To avoid returning to the same position during each coming downturn, lenders need to use this time to rethink the core of their businesses and how they want to be structured in future high volume periods.
That means asking probing questions, including:
- Are my current loan products able to capture and serve the market I am in?
- How could my bottom line benefit from expanding the top of our lead funnel?
- If we want to reach new audiences, what are we able to accomplish with internal resources and staff, and what is best solved by a partner?
- How do we eliminate operational headaches to better invest the time and energy of our leaders?
Every lending business is different, and answers to these questions will vary widely based on individual goals and current realities. Still, once faced with a deep analysis of goals and resource limitations, many lending leaders find that the best way to grow is to focus on marketing and sales with internal resources, while allowing a trusted partner to handle time-consuming operational logistics and set up. By using a one-partner, one-platform solution, lenders can achieve the best of both worlds, reaching new audiences and creating better financial stability across market cycles while allowing internal teams to remain focused on important business goals and protection from the downside with more variable than fixed costs.
Build the basis for growth now
My best piece of advice for lenders looking towards 2023 is to increase focus on untapped market opportunities. That means taking a deep look at borrower needs in their target markets and figuring out feasible ways to meet those needs through diverse loan offerings. While launching new products and channels might feel daunting, solutions such as Maxwell Private Label Origination help dramatically ease the process, making it feasible for lenders to open up these new opportunities within a matter of months.
The truth is, there’s no better time to prepare for growth than right now. With the market at a low, any infrastructure lenders construct will be an instrumental competitive advantage once volume returns. To gain a strong competitive advantage in the new year, lenders should begin constructing the framework for increasing their mortgage footprint rather than trying to squeeze loan volume out of dried up avenues. Doing so will give them resilience for years to come.
Want more tips for 2023 success?
Our brand new ebook Planning for 2023: How to Recoup Revenue, Save Costs & Drive Loan Volume in an Uncertain Market is a comprehensive 12-page report featuring insight from tenured industry veterans, including:
- Tips to leverage often-overlooked areas of the lending process, such as QC, to add tangible benefits to the bottom line
- Advice for better using technology to improve efficiency and drive borrower leads
- Instructions for growing product and channel offerings sustainably and in a scalable way
- Ways to flex your business to changing borrower needs
Get your free copy of Planning for 2023: How to Recoup Revenue, Save Costs & Drive Loan Volume in an Uncertain Market