While mortgage purchase origination dollar volume is down, application volume hit its highest level in 9 years last month due to dips in interest rates combined with wage gains and home price deceleration.
There are also clear signs that the industry and the borrowers we serve are increasing adoption of digital mortgage technologies to streamline processes, which is key to bringing down the rising costs of loan origination. Of course, that’s not why borrowers are embracing it. For consumers, it’s all about a speedy close.
Docutech has been an early innovator helping lenders transform the mortgage experience to be as “e” as it can be, but we also pride ourselves on partnering with the most innovative leaders in the industry to facilitate the increasing adoption of mortgage technology and, ultimately, an improved user experience. We prioritize staying informed as the industry evolves and providing resources to help others do the same.
We are experiencing three trends that indicate digital mortgage adoption is accelerating faster than ever before: Increasing use of digital mortgage application platforms, rapid eNote adoption and an increase in the volume of hybrid eClosings. We will be devoting one blog to each of these topics for the next few weeks, so be sure to check back.
Consumer Demand for Convenience and Customization
As lenders continue to embrace digital mortgage application tools, more loans are beginning the process electronically. Blend, which was recently featured in The Boston Consulting Group’s first mortgage industry white paper of 2019, reported that one-third of loan applicants using its platform are doing it from a mobile device and more than 50% submit their applications outside working hours. Consumer demand for convenience and customization has clearly carried over into the loan application process.
Blend is now processing more than 100,000 electronic loan applications each month. And that’s just one of the dozens of companies currently offering digital mortgage application software. Roostify’s digital lending platform is used by many leading lenders to improve customer experience by significantly reducing cycle time. The average home loan takes more than 30 days to close, but Roostify customers have been able to leverage the digital mortgage application platform to close loans in an average of just 17 days. Consumers are pushing the loan application process online, and this shift has clear benefits for both parties.
This should come as no big surprise. We wrote about this on our blog in February, citing the fact that Millennials already account for 45% of mortgage originations. The next generation of consumers embraces technology and demands speed of origination. But it’s not just Millennials who are open to a more electronic loan origination process. According to a recent Fiserv report, 67% of consumers are somewhat or very comfortable with applying for a primary mortgage online.
Borrowers Want Simpler and Faster Lending
Fannie Mae’s research takes it a step further. The company reported that 66% of borrowers are interested in a fully digital process. Why? Speed. “The majority of homebuyers said they’d like to see the mortgage process, from application to close, completed in one month.”
Fannie Mae also reports that, above all, borrowers want less paperwork. In fact, 27% of borrowers reported that they believe a reduction in paperwork would make the lending process easier, and a whopping 72% would prefer to fill out the application online. When asked about a fully digital mortgage process, most survey respondents said they would be "somewhat" or "very" interested.
The industry is evolving faster than ever before, fueled by both bottom-line improvements for lenders and borrower expectation for convenience. Lenders looking to reduce costs and deliver a more digital lending experience are encouraged to learn about our Solex eClosing platform. To keep up with other trends impacting the industry, subscribe to the blog and check back for Part 2.