With the weather warming up, you may be wondering what’s in store for the spring mortgage market. After all, sunny seasons are correlated with hotter housing markets and higher housing prices. The reason? Most sellers prefer listing their homes outside of the hustle and bustle of the holidays.
While these seasonal trends have existed for decades, they were less pronounced in 2023. With its high mortgage rates, low housing inventory, and elevated home prices, last year’s spring purchase season left a lot to be desired. Fortunately, 2024’s business prospects are already looking much brighter.
In this article, we’ll explain why economists and consumers alike are excited about this spring’s mortgage market. We’ll also provide some tips and tricks for navigating the upcoming market so you can maximize your success.
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2024’s Spring Mortgage Market: What to Expect
To start, let’s examine how interest rates, inventory, and housing prices will influence home-buying behavior in 2024:
#1 Interest Rates
2023 set records for mortgage rates, which famously surpassed 8% in October of 2023. These elevated rates caused many aspiring home buyers to wait reluctantly on the sidelines. In fact, 70% of renters said high interest rates deterred them from entering the housing market in 2023.
According to many economists, including Lawrence Yun of the National Association of Realtors (NAR), mortgage rates are finally on the decline—they’ll most likely hover between 6% and 7% by spring and remain in that range for the rest of the year.
Luckily, consumers have already caught wind of these optimistic predictions. According to a survey by Fannie Mae, more homeowners believe rates will go down than go up for the first time since the survey’s introduction in 2010. Knowing that mortgage rates’ peak is firmly in the past, these consumers can finally start searching for homes without hesitation.
#2 Real Estate Inventory
In addition to preventing buyers from entering the market, 2023’s high interest rates kept many potential sellers from listing their homes, especially those with super-low interest rates. As rates fall, NAR predicts that existing home sales will increase by 13.5% in 2024.
Additionally, housing starts are projected to rise by 6.5% in 2024, while newly constructed home sales are forecasted to increase by 19.4%. With more inventory to choose from, prospective homebuyers will have a better chance of finding homes that satisfy their specifications.
#3 Housing Prices
Due to 2023’s limited inventory, housing prices have been quite high for some time. The median national home price set records in June of 2022, when it surpassed $400,000. Home prices continued to climb during 2023.
As inventory opens up, housing prices may cool off slightly, though the influx of buyers will likely keep them relatively steady. NAR predicts that home prices will only rise by 0.7% in 2024, increasing throughout spring and reaching a predictable peak in the summer.
How to Navigate Spring 2024’s Market Conditions
Now that you know what to expect from this year’s spring season, you may be wondering how you can prepare your mortgage lending business for what’s to come.
Here are some tips and tricks for navigating the upcoming market to maximize your success:
Help Your Applicants Qualify For The Best Rates
As mortgage rates decrease, many aspiring homebuyers will begin searching for homes. Even so, this year’s mortgage rates are still on the higher side compared to a few years ago. Thus, you can differentiate yourself from your competition by helping your applicants score the very best rates possible.
Here are some strategies to do just that:
- Produce educational content about credit – While your applicants can’t control the federal funds rate, they can improve their creditworthiness before buying a home. They just need to know what steps to take. You can help them optimize their credit by producing a steady stream of credit-related content on your blog and social media channels.
- Provide personalized credit coaching – While your online content can help you attract new applicants, you can win over their loyalty by taking a more personalized approach. You just need to employ some of the credit score improvement tools we offer at Certified Credit. These tools can generate customized suggestions to help your applicants hone their creditworthiness and forecast how they’ll impact their credit scores within specific time frames.
- Employ Rapid Rescore – After your applicants take steps to improve their credit, such as disputing errors with the credit bureaus, it’s important to help them secure the best rate possible when they’re ready to buy. You can do so with ease by re-calculating their credit score using Rapid Rescore.
- Recommend timely refinancing – Mortgage rates may go down in the coming years, so it’s important to remind your applicants that they’re “marrying the house and dating the rate.” In other words, they can always refinance their mortgage when rates fall further. To secure this business, make sure to review their refinancing options with them when the time is right.
By offering this type of support, you can set your applicants up to optimize their mortgage rates and get the most out of their 2024 home purchases. In turn, they’ll be more likely to return to you for their future lending and refinancing needs.
Attract Borrowers Without Trigger Leads
Many lenders have used the credit bureaus’ trigger leads to amplify their lead generation. While trigger leads were designed to bring business to lenders and provide applicants with more options, they’ve had mixed results. Mortgage applicants often find trigger leads to be spammy and annoying, especially if they weren’t warned about them by their lender. Likewise, some lenders resent trigger leads for enticing their borrowers to switch over to their competitors.
Luckily, several bills have been introduced to restrict the use of trigger leads, including the Homebuyers’ Privacy Protection Act (S.3502), Trigger Lead Abatement Act of 2023 (H.R. 2656), and Protecting Consumers from Abusive Mortgage Leads Act (H.R. 4198). Additionally, the Federal Communications Commission announced a ruling on December 13, 2023 that regulates the use of trigger leads.
As proposed trigger lead legislation is discussed, you can proactively prevent trigger leads from taking away your business by:
- Using soft pull credit reports in place of hard pulls during the early stages of your lending process.
- Educating your applicants on how to opt out of trigger leads before they formally apply with you.
- Building positive rapport with new applicants so they’re less likely to consider offers from your competition.
Use Cascade Alerts In Place of Trigger Leads
If you’ve used trigger leads to bolster business in the past, you may want to look into alternative lead generation methods in 2024. This way, you’ll be prepared when proposed trigger lead changes take effect.
One way to obtain customized lead lists of in-the-market applicants is by using Cascade Alerts, an automated credit monitoring tool that mines your existing client database for borrowers who are searching for new mortgage products. You can customize your credit criteria to ensure you’re only shown applicants who are likely to qualify with you again.
Cascade Alerts can notify you within 24 hours of your past and present clients incurring mortgage-related inquiries. This way, you can reach out to them and secure their repeat business before it’s too late. Best of all, there’s no firm offer of credit required.
Take Steps to Combat the Recent Soft Pull Price Increase
As we mentioned earlier, soft pull credit reports don’t initiate trigger leads like their hard pull counterparts. Soft pulls also used to be significantly more affordable, making them a savvy cost-cutting tool in the face of 2023’s unprecedented credit reporting price increase.
Unfortunately, starting this year, Equifax, Experian, TransUnion, and FICO have raised their prices on several credit reporting and verification products, including soft pull credit reports. As a result, soft pulls will be priced similarly to hard pulls going forward.
The good news? There are still many ways to cut costs in 2024, from employing automated workflow solutions to strategically re-ordering the steps within your loan origination process. If you want customized suggestions, reach out to Certified Credit. Our team can suggest creative cost-cutting solutions and help you implement them effectively.
Slay This Year’s Purchase Season With Certified Credit
In summary, the market is poised to pick up during this year’s spring season, giving mortgage lenders some much-needed business. If you want to prepare your mortgage lending business for a lively spring purchase market, consider partnering with Certified Credit.
As a leading mortgage lending solutions provider, we have a host of lead generation strategies, cost-saving solutions, and workflow optimization tools that can help you make the most of this year’s opportunities. Some of our most popular products and services include our:
- Affordable credit reports
- Automated prequalification
- Automated undisclosed debt monitoring
- Automated verification of income and employment
- Automated credit supplements
- Property and valuation support
- Fraud and risk mitigation
- Flood zone determinations
- Underwriting compliance
- Settlement services
Ready to take advantage of all that this year’s spring mortgage market has to offer? Schedule a credit consultation with the Certified Credit team today.
