How challenging is margin compression for loan officers?

Optimism in the field had been based on the assumption that interest rates would eventually tick downwards this year – but they’ve remained resolutely high, increasing for a third straight week last week and with persistent inflation and a robust economy seeing many market observers push back their expected timeline for Federal Reserve rate cuts.

“In the middle of last year, we were all thinking, ‘Oh, we’ll see rates down in the fives by sometime in 2024,’” Meier said. “They don’t have to. Rates can do what they want. They do what they end up doing. So if that doesn’t happen, then you’re going to continue to see consolidation and people simply leaving the mortgage business.”

Buyers remain optimistic despite still-high interest rates

Still, one positive in the opening months of the year has been that the housing market is off to a “pretty good start” despite remaining subdued in comparison with the heights it reached during the COVID-19 pandemic.

“It’s all relative compared to last year,” Meier said. “We’re still dealing with a lot of the same problems that were existing for 2023 – higher rates, lower inventory, can’t get buyers off the fence to make decisions. Sellers aren’t really coming out in droves.

“The difference that I’m seeing, though, is we’re back in a multiple-offer environment in a lot of places. So that’s been a good, healthy sign that buyers have gotten used to these elevated rates. It felt for a moment if rates dropped a half percent, you get really busy. If they went back up a half percent, the tap shut off completely.”