The idea of a fully digital mortgage sent shockwaves through the industry nearly a year ago, but now that lenders have had a year to digest their first priority, TRID, more lenders are ready to look at the possibility of offering a fully digital mortgage.
And even if they are not ready, borrowers, no matter their age, are demanding it. Kelly Adkisson, a managing director for Accenture Credit Services, previously told HousingWire for a piece unraveling the emergence of the digital mortgage, “For bank and nonbank lenders to increase loan origination volumes, they will need to better understand and anticipate the driver at the center of market change: digital-savvy borrowers.”
And it’s consumers in general, not just Millennials, that are pushing the home financing industry to go digital because they have already experienced and have come to expect the ease of use and level of service that comes with 24/7 access and a digital experience, Nick Stamos, CEO and founder of Sindeo, a mortgage marketplace founded in 2013, stated in the same digital feature.
According to the Consumer and Mobile Financial Services 2016 report by the Federal Reserve Bank, 87% of adults are using mobile technology and 43% are using their device for banking services.
The mortgage industry is slow to fill this technological need, though. While banks have been offering mortgages online, a lot of that is really more in the area of marketing than technology, Steve Hoke, head, lending, retail product management at D+H, said in an interview with HousingWire.
“On the whole, I would say banks are still in the early stages in terms of what can be done with mortgage lending online,” he said.
Hoke’s company D+H, which is a provider of tech solutions for financial institutions, announced at the end of last month the launch of a completely mobile loan application solution for regulated lenders. MortgagebotMobile, which is part of the Mortgagebot end-to-end lending platform from D+H, is a mobile offering that allows lenders to provide a seamless experience that is done completely online, without the need for phone calls or other human interactions.
And, as an added detail, the new D+H solution allows lenders to customize and implement MortgagebotMobile to their unique specifications.
Hoke explained that what’s really helpful about this new technology is that it allows even the smallest, local lender to compete and offer similar kinds of experiences as the bigger lenders.
“Small, local lenders can now offer the same experience as the high-tech, alternative lenders, and they can win because they have that local presence. This technology levels the playing field,” he said.
In a recent report, FBR & Co. analysts Paul Miller and Tim Hayes state that they currently estimate that mortgage originations will top $600 billion in the third quarter, topping their previous estimate of $565 billion.
This is a lot of money to be earned, and according to a study by TransUnion, Millennials are both a key driver and a target market for sustained loan growth for credit unions. And they know they need to go digital to survive.
Hoke noted that this technology comes at the right time for lenders to prepare for the next spring home-buying season.
And while this is still about a half a year away, Millennials aren’t going anywhere, and in fact, their buying power is only going to grow, meaning the time to invest in technology is now. Rafferty Capital Markets recently published a report that urged companies to innovate technology since Millennials are looking for a one-stop service provider to.
“A few years ago, most banks made a decision to start the move to digital with account access for depositors, building relationships and providing much-desired transparency for customers,” said Hoke. “Now, many customers are pushing regulated lenders to provide digital mortgage options, but compliance in this channel is tricky, which is another reason why digital lending has lagged.”
Hoke explained that the bottom line is that many customers are demanding pure-mobile mortgages.
“Banks that ignore those demands will see customers walking out the door,” he said.