Technology is changing the mortgage lending – and borrowing – experience but getting it wrong can be costly for lenders.
That’s because borrowers can be frustrated by the online process and may decide to go to another lender when that happens according to the 2019 Ellie Mae Lender Insights Survey.
“An important theme we uncovered in this study is that borrowers expect choices,” said Ellie Mae Chief Operating Officer Joe Tyrrell. “They want access to multiple digital tools that they can access from any device, including an easy to use online portal to make the application and document upload process more seamless. Lenders need to make sure that their loan officers are using the tools that customers want and educating borrowers about their benefits.”
Investment in technology is evident across the industry with 93% of respondents saying they now offer online applications and portals where documents can be uploaded.
Around half of lenders also offer a mobile app and more than half of those that do say loan volume is up 5%.
But most lenders said that 50% of mortgage applications that are started on digital platforms were not completed. Around a quarter of the abandoned applications are completed on another channel but 1 in 5 borrowers switched to another lender.
“It’s clear that lenders are leaving revenue on the table by not converting more leads into closed loans and not providing the kinds of online and mobile experiences their borrowers want and their loan officers need to stay updated in real-time,” Tyrrell said. “Digital solutions that allow lenders to flag abandoned applications and intervene appropriately can result in more efficient communication with borrowers, better-managed pipelines and increases in loan origination and completion.”
Borrowers don’t always want digital
The survey findings show that lenders and borrowers are not always on the same page with technology.
A survey of borrowers earlier in the year revealed that, among borrowers who were offered online applications but opted not to use them, almost half (47%) said they prefer to work directly with a person.
But 37% of lenders in the new Lenders Insights Survey believe one of the main ways that technology improves the mortgage process is to reduce or eliminate the need for face-to-face meetings.
“Mortgage automation should be seen as a tool to help improve the lender-borrower relationship by offering a more customized, high-tech and high-touch form of service, depending on the individual borrower’s needs and preferences. Not recognizing and accommodating these preferences could cost lenders business as borrowers may choose a competitor that offers the kind of experience they want,” Tyrrell said.