Riding the Refinance Wave – Understanding the Millennial Mindset

1. Riding the Refinance Wave – Understanding the Millennial Mindset Amidst the Covid-19 outbreak, while new home purchases are taking a hit, refinance requirements are going through the roof. In the recent past, mortgage companies have been experiencing stiff competition from other mortgage companies. But a bigger challenge has been the rise of fintech companies that is significantly impacting mortgage lenders. In the US, the market share of online mortgage lenders has quadrupled over the past six years. The growing challenge from fintechs to mortgage lenders Fintechs are growing in popularity because they offer consumers, especially millennials, better transparency and ease of access. This is noteworthy at a time when millennials are dominating the mortgage market. According to a report from Realtor.com, millennials are taking over the mortgage market in the US with data revealing that they are responsible for the largest share (42%) of new mortgage loans. With half of the home buyers in the US under the age of 36, they are the ones who are driving changes in the real estate space. They have higher expectations from their mortgage lenders preferring the latter to consult and advise them on the correct match of loan components.

2. More and more fintech companies are successfully fulfilling these expectations. Numbers show that some fintech lenders have been able to reduce the time it takes to close home purchases by around 7.5 days. When it comes to refinancing, the difference is even more alluring with a 9.3 days average reduction in the closing process. Fintechs enticing millennials The reason why fintechs are making huge inroads in the mortgage industry is because they have enticed borrowers by providing the best user experience and value. While catering to millennials, fintech players in the mortgage market have built whole new ecosystems combining the latest technologies like AI, machine learning systems, and blockchain. Millennials are happily leveraging the benefits that come with fintech mortgages such as lower costs, lesser obstacles, and increased market penetration. It has led to more frequent and optimal borrower refinancing among them. Meanwhile, mortgage lending companies are grappling with a host of challenges like low purchase loan volumes, increasing compliance and operational costs etc. However, most lenders and top tier banks are now realizing that amidst competition from the fintech sector, it is time for them to pull up their sleeves to attract millennials and make the most of the refinance wave. There are several ways of doing this. How mortgage lenders can build digital relationships with millennial borrowers Today, lenders need to deliver a fast, digital mortgage experience to millennials. Mortgage lenders can consider investing in technology for seamless communication. They should be willing to innovate with the right application of tech, to streamline processing and improve turn times, while delivering improved quality and accuracy. Millennials rely on social media, mobile apps, digital financial transactions, and online research in the home buying process. It makes business sense for lenders to invest in mobile platforms that offer ease of communication for all the parties involved in the home buying process. At a time when people prefer to undertake transactions anytime, anywhere at the click of a button, connecting the borrower with the loan officer from any location will fasten the boarding process. This can also help loan officers stay connected with borrowers and in turn answer their queries to make them

3. comfortable. Most millennials may consider refinancing their loans if they experience this level of ease and comfort in the whole business. Besides, it is also important that mortgage lenders integrate the loan process into the mobile platform to automate the process, enhance quality, lessen manual effort, and shorten the closing cycle. Automation will help minimize errors in the process while increasing customer satisfaction. This will prove profitable to the lenders eventually as the cost to fund will go down. However, the most important aspect is for lenders to bring in a paradigm shift in the loan boarding experience moving to a digitally powered one from a traditional one. Lenders will have to dedicate a substantial amount for software development, technology integration compliance and the requisite workforce for these. This is even more relevant in the current Covid-19 crisis. The best way to adapt to this process and cater to millennials in a better manner is for lenders to opt for the right service provider. Why choosing the right partner holds the key Service providers can become strategic partners and help lenders move towards digitization by understanding their needs, workflow, the backend technology and clients’ requirements. They can then offer a customized platform that suits the business needs of the lenders. Companies like Visionet provide VLR, an AI/ML-powered loan document processing system, which also facilitates quality control and regulatory compliance. This system monitors document-to-data integrity, performs special loan audits, facilitates loan boarding, and simplifies High-Cost Lending review and remediation. All data and documents related to pre- or post- funding production channels are carried through to loan boarding. As a lender, you can partner with Visionet to board loans, run them through the VLR engine, identify and adjust any discrepancies, and then update the servicing system. Contact Visionet today!