Like a boyfriend, the perfect lender is experienced, well-funded: Triple-I

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Elevated mortgage rates are making some would-be sellers feel locked in to the low rate on their existing loan, and creating affordability issues for buyers.

But when it comes to choosing a mortgage lender to refer their clients to, agents are much more interested in working with an experienced loan originator who can get their buyers to the closing table than one that offers the lowest rates or closing costs.

That’s one of many takeaways for mortgage lenders in the latest Inman Intel Index, a survey of 1,269 real estate brokers and agents, mortgage lenders and property investors conducted Oct. 23-31.

The 168-page report is available exclusively to Inman Intel subscribers and includes a comprehensive breakdown of all survey responses. This month’s Inman Intel Index survey is open now.

Agents’ top business concerns

Inman Triple I Oct 2023 Agents top business concern

Of course, mortgage rates were the top business concern cited by the largest share of agents (33.5 percent) participating in the latest survey, otherwise known as the Triple-I, followed by lack of housing inventory (31.7 percent).

Fallout from class action lawsuits challenging the traditional real estate commission structure were a distant third, with 20 percent of agents citing that as their top business concern, although the astonishing $5.36 billion jury award in the in landmark Sitzer | Burnett trial wasn’t announced until the final day of the survey.

What agents value most in a mortgage referral partner

Inman Triple I Oct 2023 Agents value most in a mortgage lender referral partner

But the big takeaway for mortgage lenders from the Inman Triple-I was that, while mortgage rates are the top business concern of agents, most don’t expect lenders to solve that problem for them.

More than three in four agents (75.9 percent) said what they value most in a mortgage lender referral partner was experience and reliability in obtaining funding.

Only 7.6 percent said that what they valued most in a lender was getting their client the lowest rate or closing cost. While 6.6 percent said having an exclusive referral relationship was what they valued most, only 1.5 percent said the lender’s brand was most important.

When millions of homeowners were looking to refinance their mortgages at a lower rate during the pandemic, competing on price could be key to taking more market share. Now that soaring rates have forced mortgage lenders to pivot to serving homebuyers, consumers also want lenders to help them navigate challenges that can keep them from getting to the closing table, according to the latest J.D. Power U.S. Mortgage Origination Satisfaction Study.

“Two years ago, the mortgage market was an ultra-low-rate goldmine in which lenders were making big profits and the primary challenge was keeping up with demand,” J.D. Power executive Craig Martin said in a statement. “It’s the opposite today, with high rates and a lack of affordable homes leading to a limited number of eligible borrowers. To effectively compete in the future, lenders need to set themselves apart by focusing on addressing customers’ unique challenges and meeting their needs rather than selling a product.”

Wholesale lender UWM Holdings Corp. overtook Rocket Mortgage last year as the nation’s biggest provider of home loans, in part by competing aggressively on price. But UWM CEO Mat Ishbia has also touted the technology the lender provides to its mortgage broker partners, providing fast and reliable service.

“It’s no secret why UWM and the broker community continue to do so well in the purchase market,” Ishbia said on a Nov. 8 earnings call. “Purchase transactions require an expert. They require more attention to detail. They require a higher level of service for real estate agents, consumers and brokers — everybody. And they require an efficient process where speed matters for hitting contract deadlines.”

This is not to say that lenders aren’t also trying to get more homebuyers to the closing table by finding them a more affordable option.

Lenders like Rocket, UWM and Zillow are providing grants so that buyers only need to come up with a 1 percent down payment to take out a HomeReady or Home Possible loan — Rocket even picks up the cost of private mortgage insurance. Last month loanDepot announced it will provide second mortgages through a new “acessZERO” program to help would-be homebuyers who can’t come up with the 3.5 percent minimum down payment required to qualify for FHA purchase mortgages.

Lenders’ most popular strategies to help borrowers

Inman Triple I Oct 2023 Originators strategy to help borrowers

Mortgage originators participating in the Inman Triple I survey said that their most popular strategies to help borrowers include offering cost-benefit analyses for interest rate buy-downs (40 percent), lowering their compensation (26.7 percent), and adjustable-rate mortgages (13.3 percent).

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