ICE Mortgage Technology's latest Borrower and Lender Insights Survey found that the COVID-19 pandemic has permanently changed the way consumers use technology. With the change, folks looking to purchase or refinance a home are seeking lenders who are tech-forward, offering online tools to complete the mortgage loan process remotely.
According to the report, 99% of lenders believe technology can help improve the mortgage application process in at least one way, with the most commonly cited benefits including simplifying the entire process (74%), reducing time to close (70%) and minimizing data entry (67%).
Currently, online applications and online portals are the digital tools most offered among lenders, with more than nine in 10 offering both options to borrowers (91%) respectively, according to the report. Of lenders who offer online applications, 60% said more than half of all loan applications are submitted online, while 38% said more than 80% of their applications were completed online in 2020.
“Last year brought our industry a perfect storm,” said Joe Tyrrell, president, ICE Mortgage Technology. “You not only had COVID, which required lenders to shift to virtual workforces, but you also had to conduct business in a safe and socially distanced way with borrowers; at the same time we were experiencing a historical increase in loan volume. This caused many lenders to reevaluate their technology partners, how they were leveraging technology, the systems that they employed, and the tools that they relied on. We heard many stories from our lenders across the country that had to completely and permanently shift the way they served borrowers.”
According to the survey, 58% of borrowers said the availability of an online application would likely impact their lender decision (up from 50% in 2018). While still important, the offering of a mobile app specifically was less likely to influence borrowers’ lender selection, as 47% said the availability of one would factor into their decision in 2020 (compared to 40% in 2018).
ICE reported that homeowners who used an online application appreciated the simpler application process (55%), reduced time to close (53%) and resulted in fewer in-person interactions (49%). Not surprisingly, decreased in-person interactions grew in importance in 2020, as just 37% of consumers in 2018 cited 'no need to meet in person' as something they liked about their online application process. Whether they had been through the mortgage loan process or not, 63% of consumers surveyed believe that an online mortgage process would make buying a home easier than an in-person process.
“From a borrower’s perspective, the pandemic has accelerated the demand for a consistent, digital-first borrowing experience,” said Tyrrell. “Signing documents electronically is quickly becoming the minimum, and borrowers expect a seamless experience from start to finish. In 2020, many lenders cobbled together different solutions to meet borrower demands, but that often led to a more confusing, fragmented process. COVID highlighted the need for a single consistent digital experience for borrowers.”
Click here to read more from ICE Mortgage Technology's Borrower and Lender Insights Survey.