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The digital shift in the mortgage industry was further propelled by the COVID-19 pandemic in a significant way. Fallen mortgage rates along with social distancing and stay-at-home orders combined to boost lending volume immediately overwhelming lenders, leaving them scrambling for the technology necessary to complete the lending process remotely. Now, the industry looks to have bounced back from the influx but how can lenders better serve their borrowers?
Finastra conducted a survey of 301 consumers 75% of whom were female and 25% male, to see what the lending experience is like for these folks and what can be done to make the experience a better one.
According to the results, just 11% of buyers claimed they knew everything necessary to get through the buying process and 58% said they know enough to purchase a home. However, Finastra argues that knowing enough is not the same as being educated. Meanwhile, 29% of respondents said they knew a little about the process but wanted their lenders to educate them on the process. Additionally, 2% said they knew nothing about getting a mortgage.
So, how are consumers selecting their lenders? Well, the survey revealed that 73% of consumers selected their lender based solely on the offered interest rate. For existing homeowners, the survey found that loyalty plays a part in how a consumer selects a financial institution.
Finastra found that borrowers want their loans closed in a timely fashion with 43% saying they believed their loans should be closed anywhere from 15-30 days after the application has been submitted. An additional 37% expected their loans to be closed in 3-15 days after the application has been submitted. In order to decrease closing times, companies have turned to technology that makes the lending process more efficient, which is something that borrowers are looking for in their lenders.
According to the survey, 63% of consumers are in favor of applying for a loan through a digital channel, 81% expect documents to be signed digitally, 71% preferred uploading documents to a digital platform and 51% prefer to communicate with their lender entirely through a digital chat or platform.
"Our survey results confirm that the pandemic has had an immediate impact on the mortgage industry that will continue to reshape the market for months to come," said Steve Hoke, general manager, mortgage, origination and analytics, Finastra. "How financial institutions respond now will determine their competitiveness as consumers adopt a more virtual lending model."
Click here to view the full survey results.