Today’s uncertainties mean mortgage originators must go digital

The 30-year fixed-rate mortgage is poised to reach levels not seen since 2016 as the biggest source of American consumer debt becomes even cheaper. The Federal Reserve announced an interest rate cut in late July — the first such announcement in more than a decade — but continued economic expansion could drive rates back up sooner rather than later.

Jerome Powell, the Fed’s chairman, has repeatedly cited “global economic uncertainty” as the chief catalyst behind rate-cut discussions, but fluctuating interest rates also create uncertainty for lenders.

A recent whitepaper by Boston Consulting Group showed that both bank and nonbank originators were facing declines in origination volume, revenue, and profitability and that future rate hikes would exacerbate those challenges. But prudent lenders are already preparing for the inevitable return of a hostile lending environment.

As homebuyers express growing interest in digital borrowing tools (per BCG, 80% of borrowers would consider completing a loan application online), a number of originators are investing in a wide range of digital solutions. Those leading the industry’s digital transformation are already seeing positive results, including a sizable increase in application completion rates, greater back-end process efficiencies, and shorter application turnaround times.

Unsurprisingly, the early adopters of digital lending solutions include the country’s leading originators. Their early successes will make it even harder for challengers to catch up — especially as consumer expectations evolve even further.

Growth that transcends rates

Nearly half of consumers have viewed either loan or lease statements using online tools, and another 47% feel comfortable applying for a primary mortgage on the web. This comfort will only continue to grow as people become more familiar with managing mortgages via digital tools. Soon, they’ll expect lenders to offer end-to-end loan origination solutions.

In fact, many expect these services already.

We know this because the originators using Wipro Gallagher Solutions’ NetOxygen platform are experiencing 8% to 15% year-over-year growth in loan origination volume. Our clients, which include four of the top five United States lenders and two of the top five investors, are able to offer consumers what other originators can’t:

• Mobile applications that enable loan officers to operate as advisors in the origination process
  
• Responsively designed digital portals with chatbots powered by artificial intelligence (which create positive consumer engagement)
• Quality, agility, and performance at every level of the loan value chain

As a result, the originators using NetOxygen are completing more loans faster. Our clients have processed approximately 1.5 million loans with help from the NetOxygen platform — and most close deals in 12 to 14 days. This represents a 40% reduction in closing times on average.

In the process, they’re also achieving a 33% reduction in origination costs and can redirect up to 20% of business revenue toward innovation and product development initiatives. That’s how you build a growth model that lasts.

Are you seeking greater margins and a competitive advantage that doesn’t disappear when interest rates change? If so, it’s time to offer your consumers a different kind of borrowing experience. Consider how you can move forward in this new era of mortgage lending. To know more, schedule a demo of Wipro Gallagher Solutions’ award winning NetOxygen LOS