A everlasting disruption of the mortgage space
In light of less volume because of fewer loan originations, many mortgage lenders have needed to lay off hundreds of employees since 2022. The current market is beset by higher rates of interest, ever-increasing property values and stubborn inflation, which have further exacerbated lenders’ bottom lines. Adding to the strange mix: An untold number of householders who secured historically low mortgage rates within the 2%-3% throughout the spread of COVID-19 are actually in ‘golden handcuffs’, unable or unwilling to relinquish rates by moving.
“This is just not only a cycle,” Hanson reiterated. “This is a everlasting disruption of the mortgage space. Companies like Rocket [TPO] and UWM [United Wholesale Mortgage] – a number of corporations are taking a look at those sorts of models to see if that is smart.”
Hanson noted that loanDepot itself has needed to dramatically adjust to the times, chiefly by exiting the wholesale channel altogether. In the method, the corporate laid off some 3,000 employees because it sought to readjust to the altered landscape.
“We pulled out of wholesale,” Hanson said. “We’re out. Plenty of corporations just got out. But retail, direct lending and joint ventures are the three platforms we’re going to keep up and proceed to grow, and we’re investing technology money, investment money, to remain. We may never get into the wholesale space in the long run.”
Aberrations have been thrown into the works
Having surveyed the fractured landscape, he wonders what might have been. “I have a look at what’s happening with rates of interest. I often wonder if any person very smart years ago had said the bottom rate the US goes to have is 4% and the very best rate the US goes to have is 6% and we are going to never get below or above it – I ponder if we’d have been higher off then, than if we had gone to 0% to eight% to 13% – that actually ravages our business.”