From Boom to Balancing Act: Mortgage Half-Time Reflections


From Boom to Balancing Act: Mortgage Half-Time Reflections

August 8, 2023
Certified Credit

This year has been a volatile one for the mortgage industry. Now that we’re entering the second half of 2023, many mortgage lenders and aspiring borrowers may be wondering what the rest of the year has in store.

In this mortgage half-time report, we’ll summarize this year’s most noteworthy market conditions. We’ll also provide some predictions for the next six months, including some challenges and opportunities that lie ahead.

To finish it off, we’ll discuss our top tips for capitalizing on this year’s growth opportunities as a mortgage lender.

The First Half of 2023: An Overview

As we look back on the past seven months, some market conditions stand out. These conditions include:

    • High interest rates – After multiple interest rate hikes in 2022, the Federal Reserve continued raising rates in 2023. The result? 2023’s key interest rate is the highest it’s been in over 20 years.[i] Currently, a 30-year, fixed mortgage boasts a soaring average interest rate of 7.34%.[ii]
    • Low inventory levels – Due to these sky-high interest rates, housing inventory has reached an all-time low. In turn, sellers are receiving multiple offers on their homes as soon as they hit the market. In this highly competitive housing landscape, cash offers are king.
    • Rising home prices – With such low supply, home prices have exceeded many borrowers’ budgets. Aspiring homeowners who browsed the real estate market a few years ago are dismayed to see how little house they can afford today in comparison.
    • High anxiety – Due to these factors, homeowners and first-time home buyers alike are reluctant to take action. Many are waiting for market conditions to improve before listing their homes for sale or starting their home search.
    • Rising loan origination costs – The cost of loan origination has been on the rise. In part, this is due to FICO’s recent credit reporting cost increase—some lenders have faced price hikes of up to 400%, cutting into their already slim profit margins.[iii]

Naturally, these market conditions have been challenging for mortgage lenders.

Top Challenges Facing The Second Half of 2023

As this extraordinary era in real estate forges ahead, it’s important to prepare for what’s coming down the pipeline.

Here are some notable factors that will likely influence the rest of 2023:

    • Federal Reserve’s latest interest rate hike – In an attempt to curb inflation, the Federal Reserve announced another interest rate increase of 0.25% at the end of July, bringing the base rate up to 5.5%.[iv] While the Fed may announce additional interest rate increases, Fannie Mae and the Mortgage Bankers Association predict that average mortgage rates will decrease over the coming months and into the first quarter of 2024.[v]
    • Hesitant homeowners – Many homeowners are holding off from listing their homes. However, these homeowners are eagerly poised to sell as soon as interest rates drop.
      Just take a look at these statistics:[vi]

      • Over 25% of homeowners who are considering listing their homes would feel more urgency to do so if interest rates dropped below 5%.
      • Nearly half (49%) would feel more urgency if rates went below 4%.
      • A whopping 78% would feel more urgency if rates fell to 3% or below.

These statistics display that inventory could free up rapidly in response to reduced interest rates.

    • More construction – As of March 2023, 33% of listed homes were in some degree of construction.[vii] For reference, this metric was just 13% from 2000 to 2019. Newly constructed homes may help combat the inventory shortage, sparking new life into this slow housing market.

Based on these conditions, the purchase market will likely pick up as soon as interest rates drop. In the meantime, there are still many significant areas of opportunity for mortgage lenders.

How Mortgage Lenders Can Capitalize on 2023’s Opportunities

So, how can mortgage lenders make the most of the rest of 2023? Here are three suggestions:

#1 Invest in Digital Solutions

Before business speeds up, savvy mortgage lenders can set themselves up for success by optimizing their digital infrastructures. Here at Certified Credit, we’ve helped many of our lender partners do just that.

We design our digital solutions to solve mortgage lenders’ most common workflow inefficiencies and loan origination problems. Some of our most popular solutions include:

    • Cascade Prequal Cascade Prequal is an automated prequalification tool. Using soft pull credit reports, it can help you affordably qualify applicants at the start of their home search without affecting their credit scores or eliciting trigger leads.Soft pull credit reports have not been impacted by FICO’s recent price increase. In turn, they cost a fraction of traditional tri-merges. Financially-savvy lenders are using soft pulls in place of tri-merge reports whenever possible.Beyond that, prequalifications can help your borrowers showcase their creditworthiness to scrutinizing sellers. Due to the competitiveness of the current market, prequalified and preapproved homebuyers have a much better chance of having their offers accepted.


    • Smart Select – Another solution that can lower your credit reporting costs is Smart Select. This tool automates the credit-pulling process, making it more efficient and cost-effective.To use Smart Select, you simply need to define your credit thresholds and select your preferred parameters from the following options:
        • One bureau → two bureau → three bureau
        • One bureau → three bureau
        • Two bureau → three bureau

Smart Select can then automatically pull credit reports according to these parameters and compare them to your stated credit thresholds. If an applicant meets your criteria, Smart Select will pull additional credit reports for them. If not, the process will stop there, preventing you from spending more money unnecessarily.

    • Cascade Verification of Income and Employment (VOE)Cascade VOE is an automated VOE solution that allows you to set up a customized cascade of third-party vendors, such as Experian Verify and the Work Number. Once your cascade is ready, Cascade VOE can cycle through your preferred vendors one by one.To save money, you can arrange your vendors in order so that the lowest-cost ones are used first. By making your VOE expenses more predictable, Cascade VOE also enables you to pass on its already low verification costs to your borrowers.If Cascade VOE doesn’t yield a hit for a certain applicant, Certified Credit’s dedicated VOE division can take over the process for you. By taking manual VOE off your hands, you’ll no longer need to burden your team members with tedious VOE-related tasks.

So, why invest in new technology while the market is still slow? By reviewing and revamping your tech stack now, you’ll be in a better position to hit the ground running when the market picks back up. Your optimized tech stack can:

    1. Save you time – Currently, 36% of homes are selling for cash.[viii] Sellers favor cash buyers for their guaranteed sales and fast closing times. For mortgage lenders to compete in this cash-saturated market, they must speed up their time to close. Automated solutions can assist with this process.
    2. Save you money – In light of the recent credit reporting cost increase, mortgage lenders need to save money wherever they can. The right tools can help streamline credit reporting and loan origination costs while simultaneously enhancing efficiencies.
    3. Improve your borrower experience – Millennial and Gen Z borrowers prefer a digitized lending experience. By offering easy online prequalifications, fast closing times, and hassle-free verifications, you can satisfy this growing demographic’s demands and provide them with an exceptional borrower experience.

#2 Focus on Up-And-Coming Markets

Speaking of Millennials and Gen Zs, Next Gen homebuyers are quickly making up a growing portion of mortgage applicants,[ix] along with underserved communities.[x] You can win over these two burgeoning groups of homebuyers by focusing on borrower education.

At Certified Credit, we have plenty of educational resources on our website that you can share with your borrowers. You can also craft your own educational materials and share them in person and online.

#3 Proactively Position Yourself Ahead of the Competition

In this competitive market, you don’t want to lose any of your hard-earned business to your competitors. Here are some simple strategies for staying ahead of the competition:

    • Make connections with realtors so they send more business your way.
    • Use soft pull credit reports early on in the lending process to avoid stimulating trigger leads.
    • Encourage borrowers to opt out of trigger leads at least five days before you conduct their hard pulls.

Finish Off 2023 Strong With Certified Credit

2023 has put many mortgage lenders’ processes and profit margins to the test. Even so, there’s still an ample opportunity out there. Taking advantage of this opportunity is easier when you have a dedicated partner by your side.

At Certified Credit, we’ve been helping our lender partners stay competitive amidst these market conditions by developing customizable tech solutions. In addition to the products we’ve highlighted above, we also provide:

    • Affordable credit reports
    • Automated lead generation and borrower retention tools
    • Automated undisclosed debt monitoring
    • Flood zone determinations
    • Fraud and risk support
    • Settlement services

If you need help selecting the right solutions for your mortgage lending business, schedule a credit consultation with the Certified Credit team today.

Want to learn more about this year’s mortgage market? Tune into our latest “Talk Data to Me” podcast. In this episode, we ask our Vice President of Sales, Paul Robinson, and Senior Vice President of Product Development, Ron Carlson, about their 2023 half-time predictions.



[i] NBC News. Federal Reserve raises key interest rate to highest level in more than 20 years.

[ii] Bankrate. Compare current mortgage rates for today.

[iii] NCRA. November 22, 2022.

[iv] NBC News. Federal Reserve raises key interest rate to highest level in more than 20 years.

[v] CBS News. When will mortgage interest rates drop? Here’s what experts think.

[vi] Business Wire. Nearly Everyone With a Mortgage Has an Interest Rate Below 6%, Prompting Many to Stay Put.

[vii] USA Today. ‘Locked in’ mortgage rates mean few homes on market. How new construction has been a solution.

[viii] Money. All-Cash Home Sales Are Booming in These Cities Thanks to High Mortgage Rates.,from%2027%25%20the%20year%20before.

[ix] National Association of Realtors. NAR Report Shows Share of Millennial Home Buyers Continues to Rise.

[x] Urban Institute. The Number of Hispanic Households Will Skyrocket by 2040. How Can the Housing Industry Support Their Needs?