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Why today’s housing market makes speed and agility crucial for lenders

In light of the state of the housing market, HousingWire sat down with Nomis Solutions Chief Executive Officer Frank Rohde to discuss why agility, speed and a better customer experience are more important than ever.

HousingWire: What about today’s housing market makes speed and agility so crucial for lenders?

Frank Rohde: Fannie Mae’s latest Mortgage Lender Sentiment Survey found that nearly 70% of lenders expect to see significant margin compression in Q3 2021. While we have seen rates fluctuate on either side of 3%, the expectation is that rates will eventually remain above that threshold, shifting the mortgage industry into a purchase-driven market and driving down the overall volume.

Of course, not every housing market responds the same way. Some areas of the country may simply be immune to the factors that influence rates and prices in other localities, and applying a singular pricing strategy across all sales territories will result in leaving significant margins on the table in some areas while also pricing lenders out of others. Thus, leading mortgage lenders must be able to respond swiftly to evolving local market conditions and be agile in their pricing strategies, not only to maximize their available margins, but also to compete more efficiently and effectively.

HW: As lenders prioritize speed, how and why should they also place emphasis on a better customer experience?

FR: Improving the customer experience is not a new concept for lenders, with digital mortgage adoption being the primary means by which lenders have aimed to achieve this objective. However, the customer’s homebuying journey begins well before they ever submit a loan application, and today’s borrowers are especially savvy at conducting their own online research on mortgage rates before they ever make initial contact with a lender. In addition, the pandemic has only accelerated the frequency with which consumers conduct major transactions digitally, as well as increased expectations for speed and agility.

Furthermore, speed is intrinsic to delivering an overall better customer experience, especially in today’s seller-driven market. The lack of inventory has only fueled competition amongst buyers, thus placing even greater importance on pre-approvals and speed to close. In some cases, these factors trump price/rate considerations in a borrower’s decisions on which lender to use. By developing more customer-centric pricing strategies, lenders are better equipped to meet the varying demands of their borrowers and contribute to their ability to offer attractive offers to sellers. Given these factors, lenders must begin incorporating pricing into their overall customer experience strategy to maintain their competitive advantage.

HW: What are the primary challenges you see lenders facing in terms of speed, agility, and customer experience?

FR: Historically, most lenders set their pricing daily, unless significant intra-day changes in the market require an adjustment, and those decisions are usually based on an estimate of where lenders think they need to be relative to the market—with little to no insight into their competitors’ pricing. While pricing science can help lender optimize their competitive position, this is incredibly difficult to achieve without automation. Most lenders do not have access to the data required to conduct this type of real-time analysis, and even if they did, the time and effort necessary to undertake those calculations manually would render the results useless given how quickly the market can shift.

Additionally, pricing simply is not considered as a factor in the overall customer experience, which is a huge oversight. Yes, pricing most directly impacts lenders’ secondary market operations and overall profitability, but it also plays a critical role in the home-buying process and, by extension, the consumers’ overall experience. By underestimating or not even considering the role pricing plays in the borrower experience, lenders are missing out on a huge competitive advantage.

HW: How does Nomis help lenders tackle each of those challenges?

FR: To manage margins effectively while remaining competitive in today’s market, lenders need a comprehensive competitive intelligence tool that can deliver real-time pricing insights down to an MSA level. Nomis Mortgage combines granular market- and lender-specific data with real-time rates, pricing analytics and actionable recommendations to improve lenders’ reaction times to market opportunities and optimize their operations, and ultimately, maximize their profitability.

By analyzing over 40 million records every day from 350+ competitive lenders nationwide and pairing that with a robust repository of mortgage market data, Nomis Mortgage enables leading lenders to develop more advanced pricing strategies that reflect current local market conditions while prioritizing the consumer experience. Using advanced artificial intelligence and machine learning capabilities, Nomis Mortgage pinpoints areas of price sensitivity, allowing users to confidently execute pricing decisions on an as-needed basis and gain a better understanding of ongoing market trends and pricing analytics to compete more profitably.

The platform also provides users with historical margin data, 35+ million daily pricing data points, aggregated metrics, APR distribution and more, and Daily Data Snapshot subscribers also receive a comprehensive dataset for modeling price sensitivity across all market segments. Thanks to its plug-and-play architecture, the secure, cloud-native application can be implemented in just one day, easily working in tandem with an existing PPE or LOS in a lender’s mortgage technology stack to further optimize internal operations and refine competitive strategies. As a result, users can quickly get started translating these granular insights into competitive action, thus increasing both the speed and agility of their pricing strategies while also ensuring consumer needs remain at the forefront.

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