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Loan Officers Leaving Mortgage Industry
By June 2023, over 60,000 Mortgage Loan Originators have left the mortgage industry due to inflation, surging mortgage rates, skyrocketing homes prices, regulations, and low housing inventory. Another 50,000 loan officers are not expected to renew their loan origination licenses. Being a loan officer is not the most glamorous career today. Thousands of mortgage companies have or are thinking of leaving the Mortgage Industry. Rates are at historic high, the secondary market is unstable, lenders are scared to lend, economists are forecasting a housing market crash, inflation is soaring daily, and the Federal Reserve Board is absolutely clueless. So is now the time to be in the mortgage industry?
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6 Replies
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Loan Officers are leaving the Mortgage Industry by the thousands. Many retail Loan officers are switching to wholesale mortgage brokers because rates are lower.
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Many loan officers love what they do. However, most Mortgage Loan Originators can no longer support their families if the head of the household is a full time loan officer or owner of a small mom and pop Mortgage Broker company. Large retail mortgage companies are bleeding and most are sinking. You will see many more mortgage companies close its doors and not survive this mortgage and housing crisis.
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There are more and more loan officers and real estate agents leaving the housing industry. More real estate agents are now Ubering and looking for second jobs and are thinking of calling it quits. Retail Loan officers are switching to being Mortgage brokers because rates are soaring and they need to be competitive.
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Another 12,654 Mortgage Loan Originators left the mortgage industry from February 13th to March 15th 2024. The mortgage industry looks grim with home prices still high and buyers priced out of the housing market due to skyrocketing inflation, high home prices, and 25 year highs mortgage rates.
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There are a few key reasons why some loan officers have been leaving the mortgage industry in recent years: Declining mortgage volume – The housing market and mortgage refinancing activity have cooled off significantly from the heights of the COVID-19 pandemic. This has led to a drop in overall mortgage volume, which can make it more challenging for loan officers to earn commissions and maintain stable incomes. The reason for decling volume in mortgage loans is a combination of skyrocketing mortgage rates, out of control inflation, and surging home prices. There are more factors contributing to the reduction of mortgage loan units throughout the country.
Over the past two years, mortgage rates have risen significantly in the United States: In March 2022, the average rate for a 30-year fixed-rate mortgage was around 4.5%. Prior to March, 2022, mortgage rates were lower. Rates were as low as 2.5% in 2019. By October 2022, the average 30-year fixed mortgage rate had surged to over 7%. This represented the highest level for 30-year fixed rates since 2002. As of March 2023, the average 30-year fixed mortgage rate was around 6.5%.
So in the span of just under two years, from early 2022 to early 2023, the average 30-year fixed mortgage rate has increased by approximately 2 to 3 percentage points.
This sharp rise in mortgage rates has had a significant impact on the housing market and affordability for prospective homebuyers. Higher rates mean higher monthly mortgage payments, pricing some buyers out of the market.
The rapid increase in rates was driven by a combination of factors, including the Federal Reserve’s aggressive interest rate hikes to combat high inflation, as well as broader economic uncertainty. The mortgage industry has had to quickly adapt to this changing rate environment over the past couple of years.
Inflation can have a significant impact on mortgage rates. Here’s a general overview of how inflation affects mortgage interest rates:
Relationship between inflation and interest rates: As inflation rises, the central bank typically responds by increasing benchmark interest rates. This is done to try to slow down the pace of inflation.
Impact on mortgage rates: Mortgage rates are closely tied to prevailing interest rates in the economy, especially the yield on government bonds like the 10-year Treasury. When the central bank raises interest rates to combat inflation, mortgage rates also tend to increase.
How inflation impacts homebuyers and the housing markets is another important factor to take into consideration. Higher mortgage rates mean higher monthly payments for homebuyers. This can price some buyers out of the housing market. Rising rates also reduce the purchasing power of homebuyers, as they can afford less home for the same monthly budget.
How Inflation impact homeowners when refinancing their home: Existing homeowners may be less inclined to refinance their mortgages when rates are rising due to inflation. The incentive to refinance diminishes as rates increase, making it harder for homeowners to lower their monthly payments. Many people wonder what the long term effects of inflation is. Sustained high inflation and rising interest rates can slow down the overall housing market, as home affordability declines. This may lead to reduced home price appreciation and fewer home sales over time.
Inflation can have a significant impact on mortgage rates. Here’s a general overview of how inflation affects mortgage interest rates: Relationship between inflation and interest rates: As inflation rises, the central bank typically responds by increasing benchmark interest rates. This is done to try to slow down the pace of inflation. Another frequently asked question is how inflation impact on mortgage rates: Mortgage rates are closely tied to prevailing interest rates in the economy, especially the yield on government bonds like the 10-year Treasury. When the central bank raises interest rates to combat inflation, mortgage rates also tend to increase. Higher mortgage rates mean higher monthly payments for homebuyers. This can price some buyers out of the housing market. Rising rates also reduce the purchasing power of homebuyers, as they can afford less home for the same monthly budget. Existing homeowners may be less inclined to refinance their mortgages when rates are rising due to inflation. The incentive to refinance diminishes as rates increase, making it harder for homeowners to lower their monthly payments. Sustained high inflation and rising interest rates can slow down the overall housing market, as home affordability declines. This may lead to reduced home price appreciation and fewer home sales over time.
So in summary, elevated inflation typically translates to higher mortgage rates, which affects both prospective home buyers and existing homeowners looking to refinance. Managing the impact of inflation on mortgage costs is a key concern for manyRegulatory changes and compliance burdens – The mortgage industry has become increasingly regulated in the years since the 2008 financial crisis. Loan officers have to navigate a complex web of rules and compliance requirements, which can be time-consuming and frustrating.
Competition from digital lenders – The rise of online and app-based mortgage lenders has disrupted the traditional mortgage broker model. Some loan officers may be struggling to adapt to the more tech-driven nature of the industry.
Burnout and work-life balance issues – The mortgage industry can be high-pressure, with long hours and the need to constantly prospect for new business. Some loan officers may be leaving the field in search of more balanced lifestyles.
Career changes – For some loan officers, the mortgage industry may have been a stepping stone to other financial services roles or completely different careers. The instability of the past few years may have prompted some to seek more stable or fulfilling work.
It’s worth noting that the mortgage industry is still sizable, and many loan officers remain successful in the field. But the combination of market forces, regulatory changes, and evolving consumer preferences has made the job more challenging for some professionals.
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The mortgage loan origination industry is BRUTAL. HIGH RATES, HIGH HOME PRICES, SKYROCKETING INFLATION, OUT OF CONTROL COSTS OF GOODS AND SERVICES mean severe competition as a mortgage loan originator. Many mortgage loan originators cannot take it and continue to leave the mortgage business in droves. More mortgage companies are closing their doors like never before.