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With rapidly increasing mortgage rates dominating the housing market last year, Massachusetts’ top loan originators were faced with one of the toughest markets in years.

“The foundational challenge we’re all having is a standoff: You have all these sellers saying, ‘It doesn’t make sense for me to let go of this 3.25 rate,’” said Matthew Chabot, a residential loan officer with HarborOne Mortgage and the state’s third-most prolific loan originator by dollar volume of 2023.

With the supply of homes for sale tight, buyers were – and continuing to be in 2024 despite what appears to have been a significant bump in new listings this spring – at sellers’ mercy even though their ranks had been thinned to those who can afford large monthly payments.

“It’s all about certainty and speed. How can you get your offer to stand out from the many others?” said Guaranteed Rate loan originator Shant Banosian, long the state’s most prolific LO overall, and who again took the top spot in Banker & Tradesman’s annual Top LOs rankings based on data collected by the paper’s publisher, The Warren Group.

To help his clients keep up with the market and help their offers stand out from, Banosian said he and his team rolled out two initiatives. First, a “precommitment letter” that told sellers the buyer’s loan application had already been vetted and underwritten above and beyond what goes into a normal “prequalification letter.” Second, a mortgage product that will let a buyer close on a house within one to two business days, a far cry from the industry-standard 30 to 45 days.

“You’re starting to look and feel like cash to the seller,” he said.

Who Are Massachusetts’ Top LOs?

Visit our rankings of the state’s top residential loan originators, assembled with data from The Warren Group, to find out. 

Few Listings, Record Equity

But with so few homes on the market – 2023 closed with fewer residential properties of all types changing hands than any time since the Great Recession – and both asking prices and interest rate payments high, many homeowners who would have otherwise sold last year were still feeling trapped.

That spurred more than a few Bay Staters, 36,587 of them in all according to The Warren Group, to pursue home equity loans or lines of credit to fund renovations and other projects, loan originators interviewed for this story say. Those same home value increases helped American homeowners build up equity levels that, according to data published by the Federal Reserve Bank of St. Louis, hovered near record highs.

“People have a lot of equity so if they’re not using it, it’s just sitting there, dead,” said Andrew Marquis, a senior vice president at Cross Country Mortgage and Massachusetts’ second-most prolific loan originator by loan volume last year.

Some used home equity products to consolidate credit card debt into a loan with an interest rate between 7 percent and 9 percent, compared to many credit card rates that now loom over 20 percent on average, Marquis said.

Others, said Chabot of HarborOne Mortgage, used home equity loan products to pay children’s college or private-school tuition instead of the cash-out refinance that was popular during the 2010s. Some homeowners even funded down payments or other closing costs for a new home.

The latter is a niche Chabot said he’s developed a specialty in alongside his day-to-day purchase and refinance business. It’s helped him generate additional clients, he said, even if home equity products are minimally profitable whether on a fee or interest basis – once the borrower has found a new home to buy, they’re likely to come back to him for the purchase mortgage.

Leader Bank deployed a similar loss-leader strategy to stay relevant in its clients’ lives last year. Three of its loan originators landed on the list of Massachusetts’ top bank-affiliated loan originators of 2023.

“It’s more of a client service and retention play,” Sean Valiton, the bank’s head of residential lending said in an interview. “We’re creating a deeper relationship with them at the bank.”

The bank set up a dedicated home equity lending team that its affiliated loan originators could funnel customers to once they realized refinance interest rates were higher than the customer was comfortable with, Valiton said.

“The ability to provide options focused on each client’s unique situation is key in this market,” he said in a subsequent email. “Whether that is a standalone HELOC for things like a kitchen or bath remodel, a bridge loan to use the equity in their current home to purchase a new one or the ability to pair a HELOC with a first mortgage to lower the loan amount and get a lower rate on a purchase, the home equity product provides solutions.”