January 2, 2024
By Keith Kemph, BlackFin Group, President & CEO
When winding down the year 2023, our team received a steady stream of inquiries from lending executives nationwide asking our opinion on what’s ahead in 2024. Logical inquiries provided our wide range of mortgage industry consulting advisory and services.
Now, while our 2024 crystal ball may like other ‘optimistic’ industry prognosticators, what we found more valuable to share with our lender executives are the top mortgage operation trends that we are seeing today. The trends that are making our phone ring, today. A legitimate barometer as lenders have settled into 2024 budgets.
Digital Transformation: Mortgage lenders are increasingly embracing digital technologies to streamline the application and approval process. Online applications, electronic document submissions, and digital mortgage platforms have become more common, providing borrowers with a more convenient and efficient experience. Lenders continue to ask us, what’s the pros and cons of these systems and look for help on selecting the ideal system for their organization.
Remote and Online Services: The Post-COVID 19 trend continues as lenders accelerate the adoption of remote and online services. Seeking out virtual home tour collaborations that lead to increased mortgage apps, digital document signings, and online consultations have become more prevalent, allowing borrowers to complete much of the mortgage application and closing process from the comfort of their homes.
Focus on Customer Experience: Lenders are placing a greater emphasis on improving the overall consumer experience. This includes providing clear and transparent information, simplifying the application process, and offering personalized support to borrowers. Positive customer experiences are increasingly seen as the competitive advantage.
Alternative Financing Options: In response to concerns about affordability, lenders are exploring alternative financing options at an unprecedented pace. This may include shared equity arrangements, down payment assistance programs, and other creative solutions to help a broader range of individuals achieve homeownership.
Data and Analytics: Mortgage lenders are actively looking for ways to better leverage data and analytics to make more informed lending decisions. Advanced analytics can help lenders better assess credit risk, customize loan offers, and streamline the underwriting process. This trend is expected to continue as technology and data capabilities advance. Speaking of which, stay tuned for an upcoming announcement by BlackFin…
Sustainable and Responsible Lending: There is a growing focus on sustainable and responsible lending practices. Lenders are increasingly considering environmental, social, and governance (ESG) factors in their lending decisions. This includes assessing the energy efficiency of homes and promoting responsible homeownership.
Regulatory Changes: Can you say CFPB? As the CFPB steps up its inquiries and fines, mortgage lenders and servicers are starting to safeguard their business by updating policies and procedures. Mortgage lending will continue to be subject to regulatory changes that can impact lending practices and requirements. Lenders need to stay informed about updates to regulations, compliance standards, and government policies that may influence mortgage lending trends.
Interest Rate Dynamics: Goes without saying that interest rates will play a significant role in the mortgage market. Changes in broader economic conditions, inflation, and central bank policies can impact interest rates, affecting mortgage rates and borrower demand. We are seeing continued growth in the mortgage broker market and early movers to sell lower rates.
Innovations in Mortgage Products: Lenders are continuously innovating mortgage products and expanding lending channels to meet the diverse needs of borrowers. Can you say adjustable-rate mortgages (ARMs), or hybrid mortgage options? Yes, they might be making a comeback but when considering the average borrower FICO remains at an all-time high, lenders are responsibly mitigating risk.
Lender Defaults Rising: While mortgage bankers and servicers continue to seek out key default advisory insights and ask for help with cross training strategies, they are also refining their default management operational processes and procedures to limit their exposure and mitigate risk.
Collaboration with Fintech: As we continue to work with many of the industry’s top new and existing technologies and lenders. We are helping traditional lenders increasingly collaborate with financial technology (fintech) companies to better leverage their expertise and technology – delivering a powerful customer experience. Collaborations that lead to a more efficient processes, improved customer experiences, and innovative lending solutions.
Stay Alive Till 2025: Yes, we do hear this mantra and understand some level of continued skepticism based on the last 12 months slog, or when considering that a normal election year in mortgage markets are flat. However, we at BlackFin don’t subscribe to this trending mantra. As evidenced by our phone and email during the last few months of 2023. We do think the mortgage outlook for 2024 is relatively strong and lenders will continue to invest and engage in those critical projects they’ve been putting off so they can more effectively scale growth in 2025 and beyond.
In closing, as trends will continue to come and go and new developments arise based on economic and industry changes in 2024, the lenders who succeed in 2025 and beyond know that 2024 is the runway they need to migrate away from outdated, sophisticated, and cumbersome technologies to the more advanced, newer systems, processes, and business strategies that will assure them of sound and profitable growth in the years ahead.
Keith Kemph is President & CEO of BlackFin Group, a management consulting and services firm that specializes in the banking, lending, and mortgage banking industry. Keith has dedicated his career to helping firms ensure successful execution of critical business and technology projects to help them operate more efficiently and effectively. Keith's career includes management and executive roles with Citigroup, Bank of America, Dime Bank, Merrill Lynch and nearly a decade with a traditional top tier consulting firm in the financial services industry. For more information contact firstname.lastname@example.org