The past six months have been proof positive that a lot can change quickly in the real estate market, and Scotsman Guide’s latest Mortgage Originator Sentiment Survey (MOSS) results confirm that perceptions of the lending landscape have turned.
The June iteration of the MOSS survey, which polls mortgage professionals who qualified for Scotsman Guide’s Top Originators rankings (a comprehensive listing of the nation’s top-producing residential originators) found that 22% of respondents expect their business to perform better during the next six months compared with the first half of 2022.
That’s down substantially from the survey’s January 2022 findings, which saw 49.4% of top-ranking originators hopeful for a better first-half 2022 than second-half 2021. Multiple downside pressures, including low for-sale housing inventory and global political uncertainties, have lingered since the beginning of the year, while others (such as rampant inflation and rising interest rates) have intensified to cause sharp contraction in the mortgage market.
It’s a seismic shift that nearly tripled the share of top-ranking originators who project poorer performance in the next six months. In January, only 12.5% of Top Originators believed that their business would fare worse in the six months ahead compared to the six months prior. In June, this share grew to 37%.
Still, a plurality of survey respondents believe they will maintain the same level of performance in the second half of this year compared to the first half. In June, the share of those who predict that business will generally stay the same was 41%, up from 38.1% in January.
“It’s certainly been an eventful first half of the year in the mortgage industry, but unfortunately, a lot of the news hasn’t been as positive as we’d like from a lending standpoint,” said Jeffrey Sabourin, chief product officer for Scotsman Guide. “Many of the same risks we saw in January were heightened as the year went on, resulting in a vastly different market than the one we’ve enjoyed over the past couple of years.
“Considering the heights that the housing market was able to maintain over that time, it’s important to bear in mind that the real estate environment remains fundamentally strong. But it’s more than clear that the calculus has changed and originators are having to adjust accordingly.”
As with January’s survey data, brokers were more upbeat than bankers when looking ahead. Some 29.7% of mortgage brokers were optimistic that business will improve in the six months ahead, compared to 20.8% of bankers. Conversely, 37.2% of bankers feel that business will worsen in the next six months, compared to 32.4% of brokers.
On a geographical basis, originators in the Northeast region are most pessimistic about the six months ahead, with only 19.2% expecting better business than the prior six-month period and 42.3% expecting business will get worse. Originators in the South have the rosiest outlook, with 24% forecasting better business in the next six months and 36% believing that business will backtrack.