Three Trends Reshaping The US Mortgage Broker Industry

Demand for a Mortgage Broker has soared in the United States, both to a boom in home purchases during the COVID-19 pandemic and low-interest rates that have made refinancing attractive over the last two years. Even if interest rates rise, banks, non-bank lenders, and mortgage sector investors are likely to continue to enjoy solid demand from the buying market. According to a recent analysis from the Mortgage Bankers Association, the sector is predicted to originate more than $2.5 trillion over the next three years, a figure that is at least 40% more than the average annual originations between 2010 and 2019.

Meanwhile, the mortgage sector has been increasingly implementing technology to improve the front-to-back process of obtaining the best home loans, to improve the overall customer experience. Investors can assist in improving the loan origination, processing, underwriting, and service processes, as well as increasing consumer access to home-financing and home-buying services...

This blog looks at three dynamic developments that are transforming the mortgage business and are important to mortgage investors: 

●     More portions of the mortgage process are being streamlined thanks to third-party technology and data suppliers.

●     Nonbank lenders are gaining market share.

●     Digital platforms that are more efficient are being introduced by next-generation "sub-servicers".

Mortgage brokers are searching for ways to improve the borrower experience in this rapidly changing market and should be aware of recent industry changes, as well as which aspects of the mortgage process may be improved further and what the next potential innovations are.

To make the consumer experience smoother and faster, the mortgage sector has been implementing technology to improve the process of receiving a mortgage.

A flourishing Industry With Room For Improvement

The mortgage industry is still riding a wave of house purchases and the best home loans that began in March 2020, when interest rates fell to historic lows at the start of the COVID-19 epidemic.

At the same time, over the last 18 months, borrower expectations for digital interaction have skyrocketed. According to our research, roughly 60% of both purchase and refinance applicants would be willing to complete their whole mortgage application online, without the need for a phone or in-person assistance. Furthermore, customers need speed: if a lender takes more than 10 days to respond to an application, satisfaction reduces by around 15 percentage points.

According to a recent McKinsey poll, despite increased expectations, mortgage customer satisfaction remains low, especially when compared to adjacent goods and other industries.

While many lenders have been able to improve the efficiency of mortgage applications by digitizing the front-end platform, the industry's digitalization is still unfinished. Many origination and servicing procedures are still sluggish, manual, labor-intensive, and fragmented, which makes them vulnerable to disruption.

More portions of the mortgage process are being streamlined thanks to third-party technology and data suppliers.

Many large mortgage brokers in Los Angeles have invested in proprietary or third-party technologies across various portions of the value chain to aid with a variety of procedures over the last five years. Front-end platform modernization, workflow management, document extraction and management, income and asset verification, employment verification, title verification, appraisal management, e-closings, automated compliance, and decisions are among the many processes that have been addressed. These technological solutions are intended to improve the entire client experience while also speeding up the mortgage application process and lowering lender costs

Despite these achievements, there are still obstacles to overcome. Even though there is potential to automate more than half of the jobs across front-to-back operations, we see that many mortgage originators continue to engage in labor-intensive and repetitive fulfillment and servicing. If legacy processes aren't updated, it might lead to higher origination costs and longer cycle times. Furthermore, many originators are unable to take full advantage of rising demand because they cannot scale operations quickly enough.

So far, the majority of technology innovation and investment in mortgage lending has gone to the front end of the value chain. Many mortgage brokers, however, may save even more money, labor, and time by examining other components of their mortgage technology stacks to speed up automation initiatives, such as back-end items like straight-through processing and automated application decisioning. Rather than depending simply on a core lending platform, some prominent players are mixing multiple third-party technology components. We expect technology-driven innovation to penetrate core platforms and back-end technologies shortly, thanks to increased investment.

Nonbank lenders are gaining market share.

For years, the nonbanks percentage of overall originations has been increasing. Nonbank lenders accounted for almost half of total originations five years ago; two years ago, the ratio was nearly 60%. Nonbank lenders will account for roughly 70% of all originations by 2020. A few outperforming nonbanks with a strong digital focus and a differentiated value proposition have propelled this growth.

Because many nonbank lenders have invested extensively in digitized interfaces that make filing an application, uploading data, and communicating with the lender easier, consumers can benefit from having non-bank lender options. Some tech-enabled lenders are also proposing novel offerings, such as delivering cash upfront to home buyers in competitive real-estate markets so that they can make an informed decision.

Conclusion

The covid-19 Pandemic and technological advancements have reshaped the way the mortgage industry works. If you are in search of a reliable and technologically advanced mortgage broker in the United States, don’t wait for more and get in touch with PierPoint Mortgage - We have helped many people become proud homeowners.