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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 58 August 2024 J O U R N A L 2024, as was previously mentioned. Since 2022, reducing costs has been one of the top three goals; however, talent manage- ment has risen to the top after coming in second the previous two years. For the first time since 2017, "business process streamlining" was once again ranked among the top three priorities, while "consumer-facing technology" fell out of the top three. Lenders' opinions on the U.S. econ- omy have greatly improved over the pre- vious year. According to our most recent study, a majority of lenders still believe that the U.S. economy will enter a reces- sion over the next two years, although the number is much lower (66% in 2024 com- pared to 93% in 2023). Lenders still see the two largest threats to industry growth—a short supply of housing and rising mort- gage rates—as they did last year. Lender forecasts were also inconsis- tent when it came to the possibility of a short-term refinance boom. While 33% of respondents indicated they don't see any such boom in the near future, over 60% said they anticipated a refinance boom in 2025. Compared to mortgage banks, depository institutions were much less likely to predict a refinance boom in the near future. Regarding labor management, about two-thirds of lenders polled stated that they would be cutting staff in 2023. Lend- ers portrayed a somewhat more positive image for 2024, with 54% stating that they expected no changes, 18% anticipating reductions, and 28% anticipating staff additions. Remarkably, mortgage banks reported expecting a labor force rise in 2024 more frequently than depository institutions did. Some lenders made remarks about the challenges of attracting and keeping highly qualified employees, as well as the retiring workforce, in relation to talent management and leadership. A lot of people mentioned how crucial great leadership is for navigating market downturns. Mortgage origination volumes decreased dramatically over the past few years as interest rates rose, especially when contrasted to their historically high levels during the epidemic. This resulted in reduced profit margins for lenders and layoffs in the mortgage sector as a whole. In actuality, job growth in the mortgage sector is at its lowest point since 2014. Mortgage lenders have already had net output losses for eight straight quarters on average, including the first quarter of 2024. Since Q2 2020, the average origina- tion cost per loan has been rising rapidly, with staff making up the majority of lender expenses. Staff sizes seem to be returning to normal following job cuts in 2023 and a general decrease in lenders' uncertainty on the state of the economy and the mortgage market trajectory. Numerous companies continue to prioritize talent manage- ment, and a few announced intentions to grow their workforce this year. After the historically high quantities of mortgage purchases and refinancing during that era, mortgage activity most likely reached a post-pandemic floor. Because of this, Fannie Mae believes that certain mortgage lenders are cur- rently gearing themselves to handle an increase in mortgage originations in the event that the housing market's gradual recovery lasts through the remainder of this year and into 2025. IS A REFI SURGE ON THE HORIZON? I ntercontinental Exchange, Inc. (ICE) has published its July 2024 ICE Mortgage Monitor Report, examin- ing the dynamics of the active mortgage market's gradual shift toward higher average rates. Although there is still a significant bias in the market toward lower-rate mortgages, Andy Walden, VP of Research and Analysis at ICE, points out that this is shifting. "As of May, 24% of homeowners with mortgages now have a current interest rate of 5% or higher," Walden said. "As recently as two years ago an astonishing nine of every 10 mortgage holders were below that threshold. All in, there are 5.8M fewer sub-5% mortgages in the market today than there were at this time in 2022. This has been a slow-moving change, as borrowers with lower rates have sold their homes or, to a smaller degree, refinanced to withdraw equity. Walden added, "The entire market is acutely aware of how elevated rates have been constraining origination volumes. But seen from another angle, the same dynamic is also serving to gradually en- large the population of folks with high- rate mortgages who are actively waiting for the moment a refinance makes sense. This would benefit both a growing num- ber of homeowners and lenders."