If you’re looking to escape the stress, panic, and layoffs associated with today’s market lows, it’s time to explore ways to tap into new markets. Expanding your mortgage footprint—whether through new products and channels or by reaching new geographies—can successfully insulate your business against economic and interest rate volatility by diversifying your sources of volume and revenue.
Plus, increasing your offerings and the borrowers you serve can help you capitalize on consumer trends and tap into growing demographics. Non-QM loans, for instance, are a rapidly expanding need in today’s marketplace as the gig economy and self-employed roles increase and Americans no longer neatly fit into neat W-2 boxes. By launching products that cater to this audience, you can position yourself as a go-to lender for an entirely new audience.
Growing your mortgage footprint isn’t a one-size-fits-all exercise. Rather, the products and channels you launch and the new geographies you target will be driven by your current business structure, addressable market, resources, and more. Most basically, you’ll need to determine the specific strategies that will best support your expansion goals and, if you’re planning on launching new products or channels, the offering mix you’ll want to pursue. There are no right and wrong decisions here—each option holds its own opportunities, challenges, and criteria that may or may not fit your business profile.
While planning your lending business expansion, you may wonder which specific strategies best suit your needs and goals. Here, your main options include launching new products, introducing new channels, and expanding the regions in which you operate. None of these routes is mutually exclusive, and you may find that your ideal plan includes a mix of some or all of these strategies.
Launching new products
Today, many lenders are turning to different products—HELOCs, ARMs, non-QM, “lock and shops”—as a means to generate volume throughout market cycles. While these products aren’t necessarily new, they may be unfamiliar to lenders who have focused on conforming loans in recent years. Still, these products are often worth considering since they give loan officers more flexibility and more opportunity to meet market demands and serve every borrower who comes through the door.
When evaluating the feasibility of a specialty product, lenders should review what their peers are selling as well as what investors would be willing to purchase. They should also look internally to make sure that a given product is right for them specifically. Refresh yourself on products that have been used in the past to see if they may be a good fit, or speak to your teams and partners about other available options that may be more in line with your risk tolerance and business model.
Launching new channels
Similar to introducing new loan products, top lenders seeking new revenue sources are turning to alternative channels. By launching new channels, lenders can adjust product, pricing, and service based on borrower needs. This might include opening a correspondent division, adding a wholesale line, selling direct-to-consumer, and more.
Launching new channels might feel daunting, but the opportunity for reward can be high. A study by STRATMOR, for instance, showed direct-to-consumer channels averaging profits of 100-200 basis points per loan during high-volume periods. While in previous years, launching new channels required significant internal resources and operational lift, all-inclusive solutions such as Maxwell Private Label Origination have changed that reality. Now, lenders can benefit from channel expansion more quickly and easily, allowing them to flex to borrower needs.
Pursuing geographic expansion
Geographic expansion can help lenders gain access to new markets, reduce costs, and open new revenue opportunities. Whether you currently serve a small locale or already have an established presence across multiple states, expanding your geographic footprint can provide a robust pipeline to fuel your company’s future growth.
Along with opportunity, geographic expansion also comes with risk and necessitates careful consideration around target markets and available resources. For instance, are you adept at marketing and sales? If so, seek out a partner who can alleviate the setup, compliance considerations, and operational concerns related to geographic expansion, allowing you to concentrate on building your brand and growing your lead funnel.
Download our eBook to build your expansion plan
Our new eBook Growing Your Mortgage Footprint: How to Launch New Loan Products, Channels, and Geographic Expansions covers the considerations, steps, and benefits related to targeting new markets. Your download will include actionable insight into:
- Benefits of launching new products, channels, and geographic expansions
- How to choose an expansion strategy best suited to your business
- How to partner for success in mortgage lending
- And more
Get your free copy of Growing Your Mortgage Footprint: How to Launch New Loan Products, Channels & Geographic Expansions