If there’s anything we’ve learned from the predictions and forecasts over the past couple of months, it’s that mortgage professions should expect the unexpected. The global economy and the U.S. elections are among the external factors that will affect interest rates this year, and ultimately affect the mortgage market in one way or another.
Nicole Yung, senior partner at Stratmor Group recently spoke on a webinar. She said something we might see more of this year is multigenerational homes. According to the National Association of Realtors, first time home buyers make up one-third of purchasers today. Sixty-one percent of these are married couples, while single folks and unmarried couples make up the rest.
“We hear a lot of talk about millennials and boomers, but with aging generations, we may see the need for a different kind of home. There's a lot more homes with a second master suite or in-law quarters for example, that will become more attractive as the population changes,” said Yung.
She believes there’s a lot of optimism in the market right now. With the economy in a good place, people believe it’s a good time to buy and a good time to sell, which is all good sentiment and a good sign there will be a lot of activity this year, she added.
One of the key ways to navigate the uncertainty is through technology, a major theme throughout 2019 that is definitely moving forward into this year.
“Technology has become so intertwined in our business. There are many digital capabilities through mortgage process that are not only becoming part of the process for the lender, but the customer is now expecting those capabilities to be available,” said Yung.
According to a study by Stratmor, 76% of lenders offer borrowers the option to pay appraisal fees online. Other areas where technology has become an important part of the mortgage process include price and product, borrower engagement and agency capabilities.
“If you are a lender that isn’t offering borrowers the ability to pay appraisal fees online, it’s going to set you apart and not in a good way,” said Yung.
A rising concern that comes with today’s requirement of mortgage tech is the cost. The study by Stratmor found large banks with custom built technology solutions spend over $1,000 per loan, while independent mortgage bankers and smaller bank lenders spend an average of $300-$500 per loan on technology. Over the past year, Yung said mid-size banks and large independents have seen their tech costs per loan nearly double.
Even with these growing costs, the benefits of investing in tech are hard to deny. Stratmor found the top three benefits of mortgage technology all revolve around aspects of customer service, from increased borrower satisfaction, faster cycle times and increased transparency. Lenders continue to spend on technology because the customer experience is crucial to making a return on that investment.
“In a business where transactions don't happen all the time, you really get one shot every few years to interact with that customer and that impression is going to translate into referrals,” said Yung. That’s why the benefits of digital have really been focused on how the customer can be served better, she added.
One roadblock that brokers and loan officers need to overcome is the low adoption rates that have been recognized across the board. “Lenders are investing in all of these tools to be able to serve the borrower better and to create a more efficient process, but we're not seeing the levels of adoption we want and this is why people don't feel like they’re not getting an ROI,” said Yung.
The top three barriers of digital, according to Stratmor, are system and vendor integration requirements, difficulty of changing loan officer behaviour, and cost of implementation.
“Implementing technology is not a small hurdle. Introducing new technology properly, explaining the value proposition and working with your team to change daily habits are important steps in adoption of technology.”