Stratmor recently reported that 84% of the purchase money volume originated last year was generated by producers with less than five years in the mortgage business. When I shared this fact with senior executives, the majority were surprised; only a handful of managers noticed a similar trend at their companies. This raises the question, if newer originators are outperforming their more experienced colleagues, why aren’t lenders recruiting and training younger sales candidates?
Right now, recruiting is difficult across the board with so many originators handling record refinance volume. However, it is not a stretch to envision that a number of originators will be available if 2021 volume projections become a reality. According to Fannie Mae and MBA forecasts, lenders can expect a 13% decline in volume with a split of 55% purchase money and 45% refinance business. While interest rates are projected to remain low, lenders will be under the gun to hire quality originators who can generate referral business in a tougher purchase money environment.
In 2018, lenders faced a similar scenario when 68% of the total volume was purchase money. In the year ahead, will lenders recruit younger sales candidates who will need to be trained, coached, and mentored? Or, will companies hire veteran originators with a book of refinance business?
The research shows that the best hiring strategy is to target younger originators who are hungrier and better suited to using today’s communication tools including social media. But, my guess is that most lenders will default to hiring experienced originators with a book of business.
Whether it is just habit or all they know, mortgage managers often believe that targeting rookie originators is not a winning strategy. Many lenders also worry that if they invest in rookie training, new originators will be recruited away.
While originators leave a company for a variety of reasons, it is also true that producers who are “organically grown” stay longer than those pirated from other companies. When you add up the true cost of pirating — upfront guarantee, paying out their pipeline, ramp-up time, and the fact that pirated originators typically stay at a lender for less than three years — it’s clear that this hiring approach does not make sense economically.
On the training side, more experienced originators can be reluctant to adopt new selling techniques needed to align with the customer’s home-buying journey.
Post-Pandemic Sales Success
Many mortgage managers believe that once Covid-19 recedes, that our industry will return to the recruiting practices that were once successful. What sales leaders fail to take into account is that the demographic composition of the U.S. workforce is undergoing dramatic changes. According to the Census Bureau, by 2032—only 12 short years from now—the majority of employees will be people of color. This should be a wake-up call to senior executives because lenders’ sales organizations lack diversity. The retirement of the baby boomers will also impact the hiring pool for mortgage firms.
While 2032 may seem like the distant future, it will be here before you know it! Lenders who begin to prepare now will be well ahead of the competition. The good news is that younger originators are proving that they are worth the investment. It is time to level up your recruiting strategy by hiring inexperienced originators and training them to succeed.