The demand for mortgages around the globe has skyrocketed. This can be attributed to low-interest rates and increased home buying caused by the COVID-19 pandemic. Low-interest rates have also pushed homeowners towards refinancing.
Even though increased rates would reduce refinancing activities, lenders, banks, and the mortgage industry will likely see increased demand from home buyers. This is something that is contributing significantly to the changes we are seeing in the mortgage industry.
One of the major changes is the adoption of technology to streamline all processes from applications to signing off of properties and even payments.
Here are a few ways the mortgage industry is changing;
Mortgage Applications Are Handled Through Online Technology
Technology has been at the center stage of transformation in almost every other industry in the past few years. The mortgage industry is one of the industries that are still witnessing major changes from technological advancements.
If you look at any mortgage company such as loanDepot’s website, you will realize that all mortgage applications are now handled through online technology. Technology has not only taken over the application process but the entire mortgage process.
Mortgage companies have two options when looking into digitization. They can either build a complete system from scratch or hire a service provider with an existing system. Getting a service provider is the best option since they are experienced and ensure that mortgage companies use the latest technologies.
Non-Bank Lenders’ Popularity is Growing
Initially, banks dominated the market when it came to mortgages. However, we are witnessing the rise of non-bank lenders. For instance, non-bank lenders accounted for only half of all mortgages about seven years ago.
By 2020, this had already risen to more than 70% of all mortgages. This is expected to keep on growing especially due to the strong digitization efforts these lenders put in place. In addition, they have come up with tailored services that are made to address the different needs of their customers.
This is good news for borrowers. It means that they have a variety of lenders to choose from. In addition, competition between bank and non-bank lenders is going to make the mortgage industry even better than it currently is.
Technology has connected the world through solutions brought by the IoT (Internet of Things). Customers, on the other hand, have become used to easy solutions and want portals through which they can access anything that they want.
Initially, a customer had to go through different mortgage providers individually and then compare them to choose the one that met their requirements. This has, however, changed and is still improving.
Today, a borrower can access a portal, select multiple lenders and then get a comparison table on the go. They do not have to contact the lenders for them to get any information regarding their mortgage services. They can even send their applications from the comfort of their homes without interacting physically with the mortgage providers.
Mobile First Services
Different business models are having a major impact on the mortgage industry and steering some of the changes that we are witnessing in the industry. One such model is the mobile-first services that are in a lot of demand.
Today, mortgage providers have been forced to change how they design their services and operations. They have to look at the future of the housing industry and how it’s being shaped by the mobile landscape in a bid to survive the stiff competition in the industry.
The number of people using mobile devices has been growing every year. This means that mortgage providers have to make sure that their services can be accessed through these devices. This is giving birth to mobile applications that can be used to access all the services offered by mortgage companies.
Automated Data Collection and Improved Validation
The validation of customers has always been a challenge to lenders across the globe. The process has also been complicated and consumes a lot of time without the desired results. However, things are now changing.
New innovative solutions have made the collection of information straightforward. Today, information like employment, identity, judgments, credit, liabilities, income, and assets owned can be collected within a few minutes.
Once this information is collected and stored digitally, it can be shared across different lenders and platforms. This means that when a lender is dealing with a borrower for the first time, they do not have to collect this information again. It can be accessed digitally.
These are just a few ways through which the mortgage industry is changing. We are going to see more changes driven by technology and consumer demands in the next couple of years.