We can expect something on the order of $2.58 trillion dollars in overall mortgage origination in 2022, according to the most recent MBA forecast.

That would exceed the $2.25 trillion we saw overall in 2019, which was, by most accounts a very good year. It’s right in line with some of the great, pre-recession years the industry saw in 2004 ($2.7 trillion); and 2006 ($2.73 trillion). It compares very well to 2018 ($1.7 trillion), which was the last time we saw a drop off in refinance volume.

All things considered, especially knowing that the MBA’s latest forecast was reduced from its original forecast, a $2.6 trillion forecast, should it come to fruition, should have folks excited for the opportunity.

And yet, the headlines and conversations we’re seeing and hearing around the industry are far less positive. They have some reason to be—yes, we’re coming off of a $4.4 trillion year in 2021. This is an industry that bulks up its operations in high volume periods, so even if the expected decline takes us back to a historically positive overall volume, it’s still a decline, which means cost-cutting. Yes, this year will be a predominantly purchase market, which means more cost and labor per origination.

But it’s still a $2.6 trillion projection.

If anything, now will be the time when the well-prepared demonstrate their differentiators. Almost anyone can make money when the fish are jumping past the nets and straight into the boats. Now, however, lenders and REALTORS will be competing for purchase clients. They’ll have to prove their value to consumers to earn repeat or referral business…much less win new business. And while a lot of that will be based on the rate a lender can guarantee or the ability to negotiate the winning bid for agents, they’ll also be counting on their partners to make the process a smooth one for their customers.

And the title agencies that step up will have their stuff together. That means faster closings, because they’ve already automated their workflows and centralized their operations to eliminate redundancies, manual efforts and all-around wasted time. That means instantly responsive service. Not “a call back within 24 hours,” but instant, by way of technology for things like “when’s my closing?”

That means tight relationships with the other vendors and parties in the transaction, so that the inevitable wrinkle or two is ironed out long before it becomes a choke point in the march to closing.

And that means knowledge and expertise, nationally and locally, just in case this file is the one where the rare and unusual complication does pop up.

We’re just entering what could be a make-or-break market in 2022. For some, that $2.6 trillion will present opportunity and result in success. For others…well, they’ll really be cursing the purchase market. Odds are the brokerages, agents and lenders falling into the former category will be the same ones who’ve already prepared for what’s coming. And that will include relying on their very best service providers, rather than the also-rans.

In some markets, it may not yet seem like it. But even as some lenders continue to ride the refinance wave, the forecasts for the coming year are fairly aligned in agreeing that the refinance boom will be receding soon. For some, it already has. For others, maybe in a month? Three months? Five months? Obviously, we don’t really know. But it seems likely that, barring some incredibly impactful and unexpected event, we’ll be doing much more purchase business in the coming year than we will be refinance.

The forecasts also agree that volume will be high again in 2022. The downside is that, like most boom markets, the mortgage and title industry expanded to meet the historic demand we saw in 2020 and 2021. That means there are more mouths to feed. And while the proverbial “pie” is still ample, it will be smaller than the giant feast we’ve been enjoying.

So what does that mean for you?

If you’re a REALTOR or loan officer, you already know what you need to be doing. You’re shoring up your relationships, scrubbing your leads and double-checking your CRM. A competitive purchase market is built upon leads, marketing and sales. But if you are a lender, you’re probably also becoming more and more aware that 2022 will likely be more expensive for lenders. “Margin compression” may end up being the phrase of the year, and with good reason. When volume is sky high and a product lends itself naturally to streamlined production processes, we don’t talk too much about margins. But the purchase transaction takes longer to close, comes with more complications and can be costlier to produce.

So, REALTORS and lenders, the service providers you choose on the title and closing side can make a difference in a purchase market as well. Turn time is a great example. If your provider helps shave a day or two (or three) off of the closing process because it’s already positioned for efficiencies, your closing process is that much shorter as well. Your staffs are more productive as they move on to the next file or next sale. And, as an added bonus, you’re likely to have a happier borrower on your hands when the closing process is smooth and quick. Can’t hurt the repeat or referral aspect of marketing, right?

For title companies and other service providers, now is also the time to revisit your production and service processes as well. How automated are you? Are there costly, way-too-manual elements to your workflow that require more labor than your margins can bear? Outsourcing has long been a Business 101 solution for shrinking margins for a reason. It works. Simply being able to eliminate some fixed expenses for a provider able to scale its services is a classic and effective way to relieve some of the margin pressure.

This isn’t the first posting we’ll do about the coming purchase market and it likely won’t be the last. But we haven’t truly seen a more-or-less nationwide purchase-dominant market in years. Here’s the best news. All indications are that the opportunity will be there. And a little competition never hurt, right? It’s time to get prepared and have a plan!