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Residential Slowdowns Present Opportunities for Commercial Mortgage Brokers

Case Studies
Posted on 
March 1, 2016

If you’re a mortgage broker who relies solely on residential business, 2016 could be a bit of a letdown.

New data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD) seems to suggest a slowdown in the residential mortgage markets. According to the data, sales of single family homes in January were at a seasonally adjusted annual rate of 494,000, a 9.2% dip from December’s 544,000. Additionally, the rate was down 5.2% from January 2015’s estimate of 512,000.

This isn’t the only data that suggests the residential mortgage market will be cooling off. The Mortgage Bankers Association (MBA) latest survey stated that the Market Composite Index dropped 4.3% on seasonally adjusted and fell 12% on an unadjusted basis compared to the previous week.

Because of the uncertainty in the U.S. housing market, residential mortgage brokers experiencing a slowdown should consider closing small-balance commercial mortgages in addition to their residential business. Here’s why:

These loans are easy to close as long as you’re working with the right lender.

The right lender will handle the underwriting, processing and closing of the loan, leaving you with plenty of time to focus on your residential business and any small-balance commercial loans you come across.

It’s an under-served market, so the competition isn’t as stiff.

There are many small business owners seeking financing for commercial properties, and many of them need the assistance of a broker. Because fewer brokers specialize in small-balance commercial mortgages, you’ll have your pick of borrowers.

You can earn more because the commercial industry isn’t heavily regulated.

While new rules have set fee caps within the residential industry, commercial mortgage brokers can still earn substantial commissions on each deal that they close, even if it’s a small-balance mortgage.

If your residential brokering company is experiencing a slowdown because of the uncertainty in the market, closing commercial mortgages could be a great way to increase your business. The small-balance niche in particular, is full of opportunity for brokers. These loans are a simple way to supplement your existing residential business while earning additional income.


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