Digital Mortgages: Top 5 Trends Impacting Lending Technology Today

Traditional mortgage loans are expensive and labor intensive. Currently, the average mortgage takes 49 days to close and costs the lender $8,243 to originate. That’s a lot of time and money invested into a single loan. 

But digital mortgage technology is rapidly disrupting that reality in a way that benefits both the borrower and the lender. By taking note of current trends, lenders can unlock greater potential—and greater profitability—in the digital mortgage marketplace. 

What are digital mortgages, and why are they vital to lending?

A digital mortgage uses technology to interact with borrowers at every stage of the lending process to reduce internal costs, eliminate cumbersome manual processes, and streamline the outfacing experience. An entirely digital mortgage would have no human interaction and zero paper transfers. 

The best kind of technology, though, pairs high-tech features with person-to-person touch points, giving borrowers a modern and personal experience. In other words, technology shouldn’t replace, but should empower your lending team do their best work.

Digital mortgages are vital to a progressive lending business model. In fact, the vast majority of lending institutions (99%) believe that integrating technology improves the mortgage application process, with 74% citing a simplified process, 70% referencing a faster time to close, and 67% saying it minimizes data entry.

Maxwell’s Point of Sale, for instance, helps lenders close 20% more loans per month with powerful tools that enable lending team efficiency.

5 market trends impacting digital mortgages

In general, the global marketplace has become increasingly digitized, with the mortgage industry starting to see a technological revolution in both the front and back office. Taking note of quick-changing market trends is important: By keeping tabs on new technology available to your lending company, you can gauge which solutions may help you stay competitive and profitable in the coming years.

1. Increasing consumer confidence in digital products

With the pandemic-driven user uptick in the online marketplace, consumers aren’t just comfortable with a completely digital experience—they expect it. Worldwide, 80% of consumers shop online. These customers say convenience is the main driving factor in those purchase decisions. Even members of older generations, who may have been hesitant to participate in the online community, are now at ease with a greater range of technology.

These changes indicate that the mortgage industry should expect consumers of all ages to not only be comfortable with, but demand a modern, digital experience. A new survey by ICE Mortgage Technology, for example, found that almost 60% of borrowers said the availability of an online application would affect how they chose a lender.  

“From a borrower’s perspective, the pandemic has accelerated the demand for a consistent, digital first borrowing experience,” said ICE Mortgage Technology President Joe 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 consumers.”

2. Mobile-first behavior

Decisions are made on mobile devices. From food to finances, from education to entertainment, Americans reach for their phones first. Gone are the days of “let me get back to you when I’m at my desk.” Seventy percent of overall digital media time is spent on smartphones, and 66% of consumers use their phones to complete purchases. 

Mobile platforms empower life as we know it, so lending institutions must have digital mortgage systems that are optimized for mobile users. Otherwise, they risk losing business to those who do. Specifically, the ability to upload documents easily via a phone and intuitive, easy-to-complete loan applications are key.

The Maxwell Point of Sale solution, for instance, offers QuickApply, which pre-populates loan application fields and drives an over 98% completion rate, as well as the ability to engage borrowers with seamless interactions regardless of device.

3. Demand for automated communication that supplements human-led support

Status updates are now status quo. The average smartphone user gets 46 push notifications each day. If the pizza app sends a notification when food goes in the oven, it makes sense for borrowers to get notifications during the loan approval process. Intuitive platforms like Maxwell Point of Sale use alerts and messages at each of the major loan stages—consideration, application, processing, underwriting, and closing—to keep borrowers and other stakeholders informed and on-track. 

Still, person-to-person support is invaluable to most borrowers. Today, lenders communicate 20% more with their customers, according to a survey by Ellie Mae. Younger millennial borrowers in particular tend to prefer human-led support that is supplemented by convenient digital communications.

A happy medium is to use technology for automated notifications and messages alongside strong customer support. Implemented wisely, automated messaging can both help the customer experience and reduce labor costs—a win from both angles.

4. The push for speedy transactions 

Today’s consumer expects two-day Amazon Prime shipping times and real-time online support. Across verticals, speed has become a non-negotiable factor in customer satisfaction, and the mortgage industry is no exception.

McKinsey reports that speed is a crucial factor in landing borrower business and keeping lending customers happy. Specifically, borrower respondents said they prioritized a quick-to-complete loan application, responsive communication, and a fast time to close.

While this desire for a speedy loan process might not be surprising, it does bring to light the mortgage industry’s continued inefficiencies and the potentially massive gains technology can provide to the process. Maxwell Point of Sale, for instance, shaves an average of 13 days off the time to close, providing a powerful competitive advantage for lenders looking to wow their customers.

5. Personalization

What do swipe-right dating apps have to do with mortgages? Personalization and felt needs. After answering a few demographic questions, singles across America assume that matchmaking apps will “get them.” They trust this technology to understand who they are and what they want. They rely on the apps to weed through the options and personalize their dating experience.  

A digital mortgage should have similar qualities. By using proper filters and intuitive features, fintech should help borrowers discover the mortgage products that fit their personal needs. Today’s borrowers need to feel personally understood. Digital mortgages can do this. 

Arm yourself for the future of the mortgage market

The move towards a more digital lending process is inevitable. Still, digital mortgage processes take time to implement, and there is always some sort of learning curve—or possible restructuring—in back-office operations. 

That’s why it’s important to consider digital adoption now. The market is ready; the trends are there now. But your support personnel needs time to adapt to digital mortgage tech. C-suite leaders can give loan staff the support they need by making immediate, gradual investments in the internal digital mortgage ecosystem. 

Want to stay ahead of industry trends and arm yourself for challenges ahead? Download our new eBook, “Future-Proof: Industry Insight to Help Local Lenders Thrive” to gain access to:

  • 12 tips from industry veterans to help you optimize your mortgage process from loan application to the secondary market
  • Insight into challenges and opportunities local lenders will experience in coming years
  • 4 solutions that give local lenders efficiency, scale, and flexibility through market cycles
  • Advice from Maxwell’s leadership team on how to leverage technology, partnerships, and competitive advantages to better compete

Get your free copy of “Future-Proof: Industry Insight to Help Local Lenders Thrive”

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