3 ways to overcome common loan officer challenges in a down market

If there’s one common challenge of loan officers today, it’s that they’ll all face uncertain conditions over the foreseeable future.

After all, consumer spending has slowed, the housing sector has weakened, and 15- and 30-year mortgage rates are projected to run anywhere from 5% to 11%-plus over the next three years. The mortgage market slowdown also has seen some fintechs and smaller mortgage-only lenders either laying off employees or closing up shop entirely.

Still, there’s plenty of room for optimism. Digital tools can help line of business leaders looking for ways to empower their teams and provide resources for loan officers feeling the squeeze of market conditions. Wondering how to navigate common challenges of loan officers in a down market? Read on for our recommendations.

Challenge #1: Maximizing exposure in a down market

In times of economic instability, it may be tempting to pull back on marketing spend. And while it’s important to control expenses, financial leaders can take a page from businesses that weathered The Great Recession in 2008–2009. According to Harvard Business Review, companies that “nimbly adjust strategies, tactics, and product offerings in response to shifting demand are more likely than others to flourish both during and after a recession.”

Strategy: Dedicate time and resources to effective marketing

Marketing ties directly to your pipeline. Pulling back — or slamming on the brakes — may compound the problem. Instead, deploying more marketing may help overcome this common loan officer challenge. Here are a few ways to maximize loan officer visibility while keeping budgets in check:

• Update your lending website with practical and up-to-date information. For example, incorporate blog posts that offer lending guidance and financial wellness tips.
• Leverage your social media channels. Establish trust with consumers, humanize your financial institution with authentic stories, and relay relevant industry information via social media.
• Nurture real estate agent relationships. Despite agents’ busy schedules, loan officers can find ways to provide mutually beneficial value to real estate agent partners.

Challenge #2: Difficulty converting leads

Another common challenge loan officers across the industry are facing is that many prospective homebuyers are backing away as interest rates climb. A recent report from the National Realtors Association found first-time homebuyers dropped to an all-time low of 26% in 2022, compared to 34% last year. As a result, loan officers are feeling the pressure when top-of-funnel leads interested in purchasing a home get priced or frightened out of the market.

Strategy: Simplify top-of-funnel capture

Providing easy-to-use decision-making tools and demystifying the homebuying process with digital tools can help loan officers guide potential customers toward a loan. Here are a few ways to simplify lead conversion:

• Use a questionnaire. Help move potential customers from the awareness and interest stage to starting an application by asking them a series of questions.
• Capture minimum information. Show a buyer how much they can afford, how soon they can buy a home based on their finances, and any prospective property details that fall within their budget — in a few clicks.
• Determine a prospective homebuyer’s payment structure. Quickly run soft credit scores, look at debt-to-income ratios, and use a loan calculator to simplify capture and move customers further through the sales funnel.

Challenge #3: Losing leads due to manually intensive applications

According to a JD Power customer satisfaction survey, 40% of customers are willing to participate in a completely digital lending process; however, 67% still interact with customer service over the phone. One common loan officer challenge is losing leads due to cumbersome processes, real or perceived. It can be an immediate turnoff to a homebuyer when they experience a clunky digital process with repeated requests for information.

Strategy: Minimize application friction with automation

Any snag in the loan process can increase the likelihood of consumers seeking easier solutions elsewhere. A digital closing process can smooth out the customer experience. Look for automated tools that ease the lending process, including:

• Carry out instant approvals. Expedite onboarding with instant approvals, which can include verification of data and automation of information for loan qualification.
• Add eNotes. Enhance transparency of the process, safely store data, and increase efficiency for both customers and loan officers.
• Perform remote online notarization. Use remote online notarization (RON) to facilitate seamless digital signing of all documents.

Alleviate common challenges of loan officers using Blend’s Mortgage Suite

No matter the market challenges, Blend’s Mortgage Suite can help mortgage providers and loan officers deliver value and differentiated experiences. Blend designs each step of the lending process to be intuitive, informative, and polished by offering digital resources for loan officers and easy-to-complete processes for applicants.

Prospective homebuyers can leverage the tools such as our Self-serve Affordability workflow, which allows them to begin the mortgage process on their own, from any device they choose. Loan officers, meanwhile, can access our LO Toolkit – a comprehensive set of resources and tools to provide ongoing support and help guide homebuyers through the conversion funnel.

Want to explore other ways loan officers can overcome market challenges?

• Explore our mortgage loan officer success guide