Survey: 70% of Lenders Expect Mortgage Loan Production Costs to Rise in 2017
Capsilon Corp., San Francisco, said its annual survey of mortgage bankers at the recent MBA Annual Convention & Expo showed 70 percent of mortgage lenders report that they expect total loan product costs to continue to rise in 2017.
Only 7 percent of respondents reported that they expect total loan production costs in 2017 to be “somewhat lower” or “significantly lower” than in 2016, Capsilon said.
Additionally, the survey showed more than four out of five mortgage lenders plan to increase spending on automation technology to reduce loan production costs, with implementing the right technology is their top concern.
More than nine of 10 respondents reported they are somewhat or very interested in technology that automates key steps along the mortgage loan process, while 86 percent expect to spend more in 2017 versus 2016 on technology to reduce loan production costs by enabling a digital mortgage process.
In enabling the digital mortgage process, surveyed lenders were asked if automating the consumer experience during the application process or automating key steps in the loan production process is most important to their companies, if they are both equally important, or if neither is important because their companies are not planning to enable a digital mortgage process. The results showed that 45 percent of the respondents stated that automating key steps in their company’s loan production process is most important, 37 percent stated that automating both the consumer experience and the loan production process are equally important, and 15 percent stated that automating the consumer experience during the application process is most important. Only 3 percent said that their companies are not planning to enable a digital mortgage process.
“Lenders expect loan production costs to continue to rise, and they are looking to technology to reduce costs with automation,” said Sanjeev Malaney, CEO of Capsilon. “In developing their digital strategies, lenders are right to focus on automating key steps in the loan production process, as this is where technology can deliver the speed, data integrity, and cost savings they need to gain a competitive advantage.”
In August, the Mortgage Bankers Association reported independent mortgage banks and mortgage subsidiaries of chartered banks reported a net gain of $1,686 on each loan they originated in the second quarter, up from $825 per loan in the first quarter.
The MBA Quarterly Mortgage Bankers Performance Report said average production volume rose to $654 million per company in the second quarter, up from $517 million per company in the first quarter. Volume by count per company averaged 2,721 loans in the second quarter, up from 2,196 loans in the first quarter.
When asked what issues their companies are most concerned with, 73 percent of Capsilon Survey respondents stated implementing the right technology, 51 percent cited rising loan production costs, 36 percent stated improving customer experience/customer satisfaction, and 16 percent cited longer loan turn times. Risk of regulatory penalties, hiring and retaining employees, and complying with TRID were each cited by fewer than 10 percent of the respondents.
