November 26, 2022 / VOLUME NO. 237

Winter Is Coming 

The residential mortgage market is facing a chilly forecast in the months ahead. 

Rising interest rates, cooling demand and stubbornly high housing prices portend a frigid environment for mortgage lenders. The high-level implications are clear: The housing market is getting tougher for new buyers and a higher proportion of new loans will likely be sensitive to rising rates.    

But those conditions, tough as they may be, also present an opportunity for banks that intend to stick it out in the mortgage business, says Craig Martin, an executive managing director for the consumer ratings firm J.D. Power in Troy, Michigan. Banks with well-diversified lines of business could be in a good position to capitalize on future home buying activity, if they focus on consumer financial health now. 

The lenders with long-term staying power will be those that view customer engagement less as gathering hot leads and more as working with consumers to prepare them for buying a home at some point in the future. Martin says, “You're almost building a pipeline well in advance.”  

At the same time, banks can’t overlook technological investments in the mortgage process, Martin says. Elsewhere there is evidence to suggest many are prioritizing digital upgrades in retail lending. Forty-one percent of participants in Bank Director’s 2022 Technology Survey say their bank had upgraded or implemented digital consumer or mortgage lending over the past 18 months. Thirty-one percent say their customers can apply for retail loans, including mortgages, in a fully digital process, while another 45% say that process is at least partially digital. 

“My guess is, you're gonna see a lot of the single service or mortgage-only companies struggling,” Martin says. “The banks can weather that storm, as long as they're committed to it long term.” 

Laura Alix, director of research for Bank Director

Hitting a Home Run With George Makris

In this podcast, Simmons First National Corp.’s Chairman and CEO George Makris talks about growing the bank from under $4 billion in assets to more than $27 billion today and how he thinks athletics builds a mindset for success in life and career. 

“My coaches always expected more out of me than I expected out of me. And that’s how we operate at Simmons. We set expectations for our teams that are greater than the individuals believe they can achieve, and then we set them even higher.”

— George Makris, Simmons First National Corp.

• Naomi Snyder, editor-in-chief for Bank Director

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