When It Rains, It Pours – Surviving In The New HIGH RATE Market 


  • After almost two years of record-low mortgage rates, in March of 2022 the Fed raised interest rates, causing a sudden drop in purchases and refinances.
  • To survive the high interest market, MLOs must get out of their comfort zones and specialize in complicated loans. 
  • Targeting real estate agents, builders and being a part of the local community are some of the ways MLOs can find new referral streams.
  • Using RealKey’s automation technology and consulting services can help lenders be more efficient, learn about the latest technology and learn how to better sell and close complex products.

The last two and a half years have been a roller coaster full of steep ups and even steeper downs. The  COVID-19 pandemic brought on utter panic, food shortages, astronomical unemployment rate of nearly 9%, mortgage payment defaults, and full-blown global recession. To combat the sudden crisis, and minimize the downward spiral, the Fed stepped in reducing mortgage interest rates to the lowest in history. 

The all-time low interest rates caused an upward frenzy in the housing market and lending industries, which got flooded with home purchases, refinances, and new loan originators hoping to capitalize on the housing boom. From 2019 to 2020, the number of MLOs increased by over 11%  while active state MLO licenses increased 21% by the end of 2020. 

The boom was short-lived, and the lending industry has made a 180° turn two years later. Since the beginning of 2022, the interest rates have been increasing, causing a 14% and 68% drop in home purchases and refinances compared to last year. Even though the interest rates are increasing, the home purchase frenzy and high prices are continuing to grow due to low housing supply, high competition, and bidding wars among buyers.

The market volatility during the past 2+ years also impacted lenders. With the purchase market cooling off and refi business being wiped out, many lenders such as Wells Fargo, Chase, Better.com are undergoing massive layoffs. This leaves the remaining MLOs in a very difficult situation of survival of the fittest. Lenders can no longer wait for leads to come to them, but instead look for new referral sources and constantly reevaluate their business processes. In this new market, it is more important than ever to think outside the box, get out of comfort zones to create new ones, and streamline processes to find new borrowers.

Below are RealKey’s suggestions for MLOs to survive and grow their business in the new hyper competitive and high rate market:

Get Out Of Your Comfort Zone & Find New Referral Sources

Previously, MLOs depended on their personal circles and past borrowers to provide them with referrals. But, even referral streams need to be diversified. While it is important to nurture past and present clients, it is even more important to get out of one’s comfort zone to find new referral sources.

Here are a few ideas: 

Real Estate Agents: Agents have a direct relationship with homebuyers, and are a great source of referrals. Oftentimes, homebuyers ask their agents for MLO recommendations, or they have questions about different loan options that agents are unable to answer. Agents, who must maintain a good reputation, are more likely to refer buyers to lenders that are known to have good processes, close loans fast, and provide great customer service. 

Another way to win over agents is to do difficult loans that nobody wants, and do them well. Not all purchases are for luxurious properties with buyers that have everything in order. Some properties are complicated, other transactions include complex finances or credit, while others involve unique loan programs with stringent document requirements, and not all MLOs want to (or even know how to) deal with these loans. To test a new relationship, an agent might give an originator a few difficult loans. If an originator can close them fast, smoothly, and with transparency, an agent will be more likely to work with this mortgage loan originator in the future. Doing these tougher loans can also give an MLO a competitive advantage over lenders that simply don’t want to get their hands dirty.

Relocation Experts: Large corporations are constantly relocating top talent. While some organizations have internal departments as a part of their HR unit, others outsource to external firms. These relocation units often work with a select team of real estate agents and loan originators, which are a part of a stress-free relocation service for the employee. Researching and networking with HR departments and external relocation companies is another great source of referrals to help MLOs generate income.

Builders: The pandemic-induced low interest rates created a huge housing demand and deficit. Houses listed on the market were sold immediately with over 70% of properties going through bidding wars. The home shortage prompted builders to increase home production, with housing building permits increasing by 6.7% compared to the previous year. Establishing a relationship with home builders, who need pre-approved buyers, is a great way to get added to their lender list. Here is the top 100 US builder list for 2021 to help identify which organizations to target.

Tap Into Your Community: Partner with a local charity, volunteer at your kid’s school, join a neighborhood group. Being a part of the community is a great way to connect with other non-industry individuals, get to know them in a more informal setting, and to become a subject-matter expert for mortgage-related questions in order to establish trust and possible future business.

Automation, Automation and More Automation!

While automation is the industry standard in mortgage lending, we can’t stress enough how important it is for originators, closing teams, and borrowers. Approximately 60-70% of tasks in the lifecycle of a mortgage can be automated, shortening the loan processing cycle by up to 50% by eliminating repetitive tasks and errors for everyone. Automation technology also provides a lot of value for borrowers, making it much easier to provide a more positive experience for them. It provides clear instructions, transparency, and an overall understanding of the process and requirements. RealKey’s digital tools make the mortgage process more efficient to allow brokers and lenders to close more loans, faster, with less effort from start to finish, freeing up time to find new clients and grow their business.

Marketing automation is another great tool to help MLOs effortlessly manage and strengthen relationships with present and past borrowers, as well as relationships with leads and referrals. Marketing automation tools can be integrated with CRM to create customized marketing and communication campaigns. Although this can require a big upfront time investment, once everything is set up, it can be a self-functioning tool that frees up time to focus on other ways of scaling their business. 

Specialize In Niche & Complicated Loans

Not all loans and borrowers are created equal. Some lenders choose to specialize in higher-priced or easy-to-qualify loans while shunning complicated products such as FHA, Improvement or Rehab, Construction, BMRs, USDA, and VA loans. Specializing in these loans can help diversify a LO’s expertise and offering, especially during a difficult market.

With increasing interest rates, inflation, and overall global volatility, borrowers may need cash to consolidate debt or fulfill unexpected financial needs. Many opt for a HELOC or 2nd mortgage to get the cash injection because these products allow borrowers to maintain their current low rates from the pandemic, while accessing the capital in their homes. Knowing how to explain and quote both options for refinancing while providing borrowers with a clear understanding of the requirements, and processing the loan smoothly can be another advantage for an MLO during a high rate market.

Jumbo Loans, which can be more complicated due to the natural complexity of the buyers’ finances, are another product that lenders need to specialize in.Compared to last year, home prices have increased by 15% due to housing shortage and increased demands. This created an extremely competitive environment among buyers who got into a bidding war to get the property they want. Last year, more than 30% of homes sold for above asking price, making JUMBO loans more common than ever. By closing more JUMBO loans, MLOs can service refinances and referrals, as well as providing them a niche.

RealKey Can Help

Fintech and other digital tools are changing at the speed of light. It can feel like a full-time job to stay on top of new digital offerings and learn how to use them. By integrating RealKey into MLOs loan origination operations, mortgage teams not only get technology that enables them to streamline their processes, but also the ability to process the most difficult loans requiring more stringent documentation. RealKey’s automation tools can help MLOs and closing teams better understand difficult loan products and their requirements. This, inturn, helps lenders communicate better, qualify borrowers for a more diversified portfolio of loan products, and clearly explain their requirements.

As an added service, RealKey offers free consulting from the most experienced and highest producing experts in the mortgage industry. They stay up-to-date and share the most effective technologies and best practices to help new and seasoned mortgage teams easily scale and improve on their business, even during difficult times. The consulting service doesn’t end after a lender is onboarded, as the RealKey team is available to assist whatever technological and product-related questions may arise.

RealKey is an innovative mortgage automation solution that can help lenders run and grow their business efficiently while providing customers with the best experience. RealKey’s software works seamlessly with existing point of sale and loan origination systems to bring an end-to-end, fully digital mortgage processing experience and submit clean files for complex loans and to strictest lenders.

Contact us today for a demo, and learn how RealKey can help you scale your business.