Mortgage Lending Outlook: What’s in Store for 2019

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As the U.S. economy continued to strengthen throughout 2018, mortgage companies increasingly faced challenges related to rising interest rates, a shrinking housing inventory and record home price appreciation. For others, however, it was a record year of growth, driven by strategic investments that led to strong profitability and a commitment to product development and platforms to enhance the customer experience. 

Moving ahead in 2019, we’ll see even more strides, driven by strengthening technology – particularly mobile and digital lending – as well as tapping into what consumers want, staying aware of the competitive landscape, and shifting from a reactive to proactive approach to compliance. Future lending innovations through technological advances in Artificial Intelligence (AI), robotics, and security technologies such as Blockchain will drive customizable experiences that will drive consumer confidence while presenting multiple, frictionless methods of engagement.

Mobile-Friendly Technology Is Now the Norm

Over the last several years, mobile-friendly technology has become a “must have” across all industries, especially mortgage lending. Increasingly, we are seeing advancements focused on reducing the number of touchpoints and enhancing the borrower experience.

We are no longer an industry of paper forms and emailed documents. Moving into 2019, we expect to see the mortgage industry move towards a “one touch” mortgage experience.

The real differentiator for lenders will be delivering an upfront mobile engagement designed to quickly remove the client from the shopping pool. Lenders that do so will be able to offer consumers a sophisticated, easy-to-use experience through a one-touch technology platform that helps reduce overall costs.

Knowing Your Customers Has Never Been More Important

While technology advancements will be key, knowing one’s customers will be even more crucial. At our company, we know that just over 60% of our loans are still originated on a desktop device. This makes it critical to provide a frictionless experience that can follow the consumer wherever they go, from desktop to mobile to laptop, etc. As our industry pushes forward with innovation and technology, knowing the specific needs of the consumer is what will drive success.

Consumers Will Redefine ‘Digital,’ Posing Challenges

The voice of the consumer has never been louder. As digital lending increases, it will be further complicated by consumers’ right to redefine what “digital” means to them, how it impacts their buying decision and how they choose to interact with their lender.

Consumers today use multiple channels and methods, and they expect to be interchangeable and concurrent all at the same time. Lenders will need to deliver on this expectation.  

Competition From Alternative Lenders Will Continue 

As the industry shifts to a digital-centric environment, lender competition online will heighten. Between companies like Zillow, Redfin and Trulia and a significant compression of the home shopping cycle, the complexity of acquiring tomorrow’s customer has never been greater, making it crucial for lenders to develop the resources, bandwidth and execution prowess to engage consumers much earlier in the home buying process, while staying true to key fundamentals supported by data.

Compliance Will Stay Top-of-Mind

Compliance will continue to play a significant role for mortgage companies. To be successful, lenders must make investments that will meet the standards of what a federal regulator wants to see.

It is critical to have a strong business unit that understands the rules and regulations of the industry as well as how they apply to day-to-day operations.

Additionally, compliance departments must validate the controls the business unit says are in place to meet the policies and regulations required. Internal auditing and testing will ensure that adequate compliance controls are in place.

This level of compliance has not been the norm for the mortgage industry in past years and some mortgage lenders have been slow to adopt a proactive approach. In 2019, we will see more organizations electing to make a significant investment to get out of the reactive environment and into a proactive mindset. 

As the industry moves into a new year, success will be driven by those that make strategic investments in technology and platforms that enhance the customer experience.

Lenders must offer a sophisticated, easy-to-use experience through a one-touch technology platform, while also understanding the specific needs of consumers and the expectation to use multiple channels interchangeably.

It will also be crucial that mortgage companies get ahead of their alternative lender competitors by developing the resources to reach consumers early in the home buying process.

Finally, as compliance continues to stay top of mind, companies will need to approach it proactively rather than reactively as they have in the past.

Steve Harpe is chief information officer for Gateway Mortgage Group, one of the largest privately held mortgage origination and servicing companies in the U.S.

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