Survey Shows ‘Momentous’ Surge in Technology Adoption
(Photo illustration courtesy of ICE Mortgage Technology.)
The coronavirus pandemic has permanently changed the way consumers use technology and those looking to buy or refinance a home are seeking lenders who offer online tools to complete their mortgage loans from home, according to ICE Mortgage Technology, Pleasanton, Calif.
The company’s latest Borrower and Lender Insights Survey reported the overwhelming majority (90%) of lenders believe that technology can help improve the mortgage application process, citing benefits that include simplifying the entire process (74%), reducing time to close (70%) and minimizing data entry (67%).
“Last year brought our industry a perfect storm,” said Joe Tyrrell, President of ICE Mortgage Technology. “You not only had COVID, which required lenders to shift to virtual workforces, but you also had to conduct business in a safe and socially distanced way with borrowers; at the same time we were experiencing a historical increase in loan volume. This caused many lenders to reevaluate their technology partners, how they were leveraging technology, the systems that they employed and the tools that they relied on. We heard many stories from our lenders across the country that had to completely and permanently shift the way they served borrowers.”
Other survey findings:
–The importance of lenders offering digital platforms such as online applications during the lending process increased for borrowers in 2020, with 58% saying the availability of an online application would likely impact their lender decision (up from 50% in 2018). While still important, offering of a mobile app specifically was less likely to influence borrowers’ lender selection, with 47% saying availability of one would factor into their decision in 2020 (compared to 40% in 2018).
–Homeowners who used an online application appreciated the simpler application process (55%), reduced time to close (53%) and resulted in fewer in-person interactions (49%). The survey said decreased in-person interactions grew in importance in 2020, as just 37% of consumers in 2018 cited ‘no need to meet in person’ as something they liked about their online application process. Whether they had been through the mortgage loan process or not, 64% of consumers surveyed believe that an online mortgage process would make buying a home or refinancing easier than an in-person process.
“From a borrower’s perspective, the pandemic has accelerated the demand for a consistent, digital first borrowing experience,” Tyrrell said. “Signing documents electronically is quickly becoming the minimum, and borrowers expect a seamless experience from start to finish. In 2020, many lenders cobbled together different solutions to meet borrower demands, but that often led to a more confusing, fragmented process. COVID highlighted the need for a single consistent digital experience for borrowers.”
–Currently, online applications and online portals are the digital tools most offered among lenders, with more than nine in 10 offering both options to borrowers (91%) respectively. Of lenders who offer online applications, 60% said more than half of all loan applications are submitted online, while 38% said more than 80% of their applications were completed online in 2020. However, traditional loan application methods may be more common at larger organizations. Half of large institutional lenders, or those with 200 or more employees, indicated that less than 50% of their loan applications were submitted online.
–Borrower respondents who were offered online and/or mobile options by their lenders took advantage of those tools during the mortgage loan process. Sixty-one percent of borrowers used an online application in 2020, slightly up from 58% in 2018; 61% also used an online portal for electronically signing and notarizing documents, compared to 56% in 2018.
–Responses from borrowers also revealed opportunities throughout the mortgage application process for better alignment, understanding and service on the lender’s part. Specifically, borrowers and lenders had differing views on the time needed to fill out a loan application and the method used for ongoing communication with borrowers. However, lenders and borrowers tended to agree on the right amount of communication to be used throughout the mortgage loan process.
–Nearly nine in 10 lenders (86%) said borrowers should spend less than 30 minutes filling out a loan application, but 68% of borrowers said they actually spent 30 minutes or more completing their application.
–The majority of lenders (72%) felt borrowers were satisfied with the amount of communication from them. More than half of lenders (74.8%) said they contacted borrowers at least once per week to update them on the status of their loan after the application was filed. Borrowers shared this sentiment, as 77% said they had “just the right amount of contact” with their lender this past year.
–If they were to apply for a new mortgage within the next year, borrowers would most appreciate interacting with their lender through an equal blend of traditional and digital methods (26%), closely followed by interactions that have a more traditional focus (e.g., telephone) (25%) and purely traditional interactions (e.g., in-person) (24%).
–Homeowners who used an online application appreciated the simpler application process (55%), reduced time to close (53%) and fewer in-person interactions (49%) – a significant rise due to the pandemic. In 2018, only 37% of consumers cited ‘No need to meet in person’ as something they liked about their online application process.
The survey can be accessed here.