3 Things to Watch in a Falling Rate Environment

This week, we got the good news we have been waiting for since 2022 - Rates are finally likely to be cut…

Maybe as soon as next month.

While it is great news - it’s not all great news - there are risks that have to be accounted for and hedged against to ensure this new market is profitable and your business is protected.

With the changing tides, there are three things you need to remember when rates shift:

1. EPO Risk has gone up substantially - even if they can’t qualify for a lower rate with you, there are shops with razor-thin margins. Watching triggers for EPO risk closely could save you tens of thousands of dollars in the next two quarters.

2. Your old pipeline is suddenly at risk - Your pipeline just became a gold mine - or, at the very least, more valuable than it was last month. But it became that for you or for any other lender who is willing to follow up and nurture them. Runoff risk is much higher in an environment where terms just got significantly better - especially if that client is comparing the terms you gave them last month with the terms another lender is giving them today. 

3. Direct-to-consumer marketing is underway. These groups will begin to fire up their marketing machines, and one of their oldest tricks is targeting those underserved clients who traditional lenders assume aren’t going to save enough quite yet. For defense, engaging to add value and communicate will be crucial in capturing business early before those clients begin the process with another lender.

Still, this is the moment when all the sacrifice and work you’ve been putting in for 3 years begins to come together for you. 

Some of the changes our users can expect to see will be returning streamline, IRRRL, and MI reduction predictive alerts.

For some of you, you’ve never seen a rate and term predictive alert, but among other things, you can expect those to begin to trigger once again.