With the COVID-19 still affecting every industry, the banking industry is facing problems ranging from fluctuating mortgage rates to canceled open houses due to social distancing rules. This article emphasizes the key trends that are happening in the mortgage industry even in the chaos and confusion of the current world situation. Taking up these trends and responding quickly and efficiently to these ups and downs in the housing market are the key steps each mortgage lender should follow. With the shortage of affordable housing and hiking interest rates, mortgage lenders should update their approaches with regulatory changes and borrowers’ demands for a quicker lending process. As per the reports conducted by HDMA, the second quarter of 2019 saw $13.86 trillion Dollars in outstanding household debt across the United States whereas Housing debt totals $9.81 trillion, or 70.78% of the total.
Purchasing a home is always a dream of people and they have found ways in choosing the mortgage industry. With interest rates rising up, home-equity loans for bill consolidation, construction projects, and other elements are about to surge. Participation in the 2020 mortgage market demands flexibility and patience from borrowers and lenders that an ideal Mortgage Support Services could support.
Below stated are seven Trends that are changing the Mortgage Industry Up and Down in 2020:
1. Incorporation of Digitization & Automation of the Mortgage process
Minimizing costs, increasing transparency, and easy identification of needed information, mortgage processes checks cost, reduce staff time, chances for error, and risk. Through automated workflow, mortgage origination processes can be used for helping borrowers buying homes, refinance, or obtain a home equity loan or line of credit. Automating clerical tasks will smooth their relationship with staff. Validating loan files through automated processes that often contain information adhered to all existing loan data and terms will minimize origination costs and time to close eliminating the chance for human error. Helping financial institutions that plan to buy or sell automated reviewing ensures quick evaluation of portfolio quality and accuracy. With the emergence of the increased equity market, automating processes and approvals will assist financial institutions in taking maximum advantage of opportunities in the upcoming year. Paving ways for financial institutions for getting a clearer understanding through efficient and cost-effective processes, automated techniques will evaluate their mortgage portfolios.
2. Use of Smooth Multichannel Borrower Experience
Smoothening online and mobile channels for loan applications is evident as the majority of borrowers initiate their loan application process. In those, about majority percentage prefer applying for loans through a laptop, a desktop computer, or mobile devices. Challenging to deliver lending processes efficiently, these channels will smooth borrower experiences. Nurturing these channels will enhance mortgage business financial institutions can make pleasant customer experiences in coming years. From the origination process, the borrower’s preference may include completing an online application, reaching out to a call center, or using a chatbot. Using multiple channels and vice-versa, these empower switching from one channel to another without hindering any experience.
Replacing traditional channels with face-to-face conversations, each channel will deliver a rich digital experience. Industries and financial institutions should also give interest in providing an intuitive experience for lenders.
3. Growing Importance over Data
Using data points for assisting lenders will help them make decisions and deliver an enterprise-wide, 360-degree view of borrowers and whole lending operations. Enabling more transparency and quantity of data right, this technique will make data more accessible to ensure quicker, better decisions that reveal additional opportunities. Automation and faster decision-making assure faster closing speed, enhanced user experiences, and loan quality which will, in turn, ensure greater market share. At every stage starting from entering borrower data to its execution, information is secured from a data source rather than documents.
A large, robust, and accurate data set is the precursor that drives towards the usage of artificial intelligence (AI) and machine learning. To develop a clear data strategy, financial industries should assign dedicated resources to the management of data initiatives. Using data-focused technology will ensure digital assistants, voice banking, and digital banking payments. Improving the quality of decision-making, financial institutions will be able to fully trust decision-making engines that could potentially enter or exit mortgage businesses easily.
4. Constant Homes values if COVID-19 is Short-Lived
Recently property values are steadily rising, amassing record levels of home equity. If in any case, the pandemic prolongs, property values will go down. Experts predict prices will flatten, but the long-term effects from the shutdown will be weakening for this industry.
5. More Drop in Mortgage Rates
The mortgage rates have risen and fallen, seemingly unpredictably encouraging lenders in raising these rates to get their businesses afloat. Lenders are reluctant with mortgage-backed securities, or MBS, to trade these securities to hedge their risk of rates varying between the time, a borrower initiates with an application and the closing.
6. A Steady Increase in Refinances
As mortgage rates are falling, more homeowners are choosing to save their money by refinancing. The incentives to refinances are increasing with the money borrowers can save. The second quarter of 2020 is going to continue with a wave of refinancing applications. Equity-rich homeowners prefer cash-out refinancing options during the COVID-19 crisis. Lenders will choose to run on credit and employment checks, so the working-class borrowers will not be qualified for the loan.
7. Growing Relevancy over Digital Technology
Contactless technology during COVID-19 crisis is assisting the financial industry with remote technology options in conducting businesses. Both private companies and government agencies are adopting widely accessible online tools such as e-signatures, mobile image capture, digital documentation, automated valuation models, remote online notarization, and e-closings.
Recognizing mortgage industry trends effectively and mobilizing your operations, OURS GLOBAL, Mortgage Support Services will drive growth to your businesses. Understanding all technologies that can be incorporated into mortgage industries has shaped itself as a critical task that helps devise for customers in playing a more fulfilling role in the transaction. Significant changes are happening giving more attention to borrower experience. Modernizing traditional business processes with unattended attention will drive more customer satisfaction. Supporting your technology side, mortgage lenders will help in creating delightful experiences without comprising security and experience. Contact us for your mortgage service requirements and acknowledge how we can assist financial institutions in serving their borrowers.