How the Mortgage Market is Opening Up to Brokers
An up-and-down past decade is finally starting to level out.
The housing market has gone through a rollercoaster from both the lender and borrower perspectives over the last decade, but recent data highlights a positive outlook. The Health of Housing Markets Report expects the broad market to experience more stability than in years past, thanks in part to slower growth and decreased mortgage rates. This may present an opportunity for licensed mortgage brokers who help consumers get into the home of their dreams or refinance a current mortgage for better terms. However, mortgage brokers have not always had the support of consumers or news outlets covering the housing market.
Working with a mortgage broker has gotten a bad rap in some markets because of the consumer focus on fees combined with the perception that getting a mortgage is as easy as submitting a brief application online. The reality is that today’s mortgage market is more complex than ever, paving the way for prospective and current homeowners to seek out the knowledge and expertise of licensed mortgage brokers.
A Competitive Marketplace
The influx of mortgage lenders over the last several years has created a highly competitive market. Traditional financial institutions, including banks and credit unions, now have to compete with private mortgage lenders and online mortgage providers, and this can cause some confusion among borrowers. The sheer amount of information available on current mortgage rates, loan terms and qualification requirements has become more overwhelming than anything else for many consumers.
Because of the seemingly countless options borrowers have when selecting a home loan lender, mortgage brokers have become a go-to resource for getting the right deal. Brokers who are able to work with several different loan providers offer the advantage of saving time and frustration for homebuyers or owners who are refinancing. Many consumers are willing to pay for the professional advice and guidance experience brokers offer, and that trend is likely to continue as the housing market continues to stabilize.
Increased Buying Power
In addition to expert advice and access to multiple lender offers for mortgage loans, consumers recognize the increased buying power they have when working with a licensed broker. Many independent brokers have access to lower rates through the wholesale market, compared to standard retail pricing.
With a lower interest rate comes a lower monthly payment, but many potential homeowners are not necessarily focused on reducing monthly cost. Instead, they are looking for more home for their dollars, which a lower interest rate can afford. Working directly with a lender may not allow for lower wholesale rates, and consumers are moving toward brokers for this reason.
Lower Rates and More Affordable Terms
The combination of increased competition and the ability to gain access to wholesale rates gives mortgage brokers the upper hand in negotiating for their homebuying clients. Borrowers who want the most affordable home purchase possible, or more amenable terms on a refinanced mortgage, recognize that working with a mortgage broker is often the solution. As interest rates across the board remain stagnant for the remainder of this year, it is likely that more homebuyers will migrate toward working with a broker to ensure they are getting the most benefit from their loan.
Mortgage brokers play a vital role in the housing market, especially for consumers who want expert help and an understanding of all their options. As more homebuyers realize the benefits independent mortgage brokers offer in the process, the trend of relying on a broker for help in buying or refinancing a home will continue.