Managing costs and creating operational efficiencies are most important to mortgage lenders as the ongoing pandemic puts pressure on their profit margins.
Outsourcing was the leading choice to achieve this efficiency, by 41% of respondents interviewed for Altisource Portfolio Solution's latest State of the Originations Industry report.
This resulted in more technology and digital services being used to reduce staffing requirements. 39% of those surveyed stated that 200 people were surveyed between August 17 and 29, 2020. These proportions remained unchanged compared to the previous year survey.
"Since the pandemic is causing costs to rise and revenues to fall in many cases, this makes sense. Instead of spending time and money hiring and training full-time employees, service providers can support and strengthen an originator's workforce by providing part of the volume of the The lender, "the report said. "In this way, an originator can avoid the typical hire / layoff cycles that significantly deter an organization from closing more loans."
When asked what they forecast for the mortgage business in the next two to three years, 80% of those surveyed – compared with 79% in the previous year – said that originators will outsource more to third-party providers in order to better cope with market fluctuations. especially since the total volume is expected to shrink due to lower refinancing activity.
This was the third most common forecast, with # 1 being that rising costs will drive smaller lenders out of business or merge with other lenders. This was stated by 84% of those surveyed, four percentage points more than in the previous year.
Between these two possibilities was the return of private money to the mortgage securitization market, which was forecast by 82% of respondents. This percentage was unchanged from the previous year, but was the most frequently cited answer for this period.
Among the forecasts made by respondents, the likelihood of a market crash in the next 24 months was fourth at 68%, while fifth at 64% was a new option for the latest survey. Non-banks will dominate the origination business compared to last year for the next two to three years.
Previous surveys gave respondents the chance for big banks to return and dominate the mortgage business. In last year's survey, this was the second most cited answer at 81%.
Regulatory constraints were the most cited challenge in today's mortgage market for 27% of respondents. It was followed by a technology with 24%; Employee retention 21%; Margin Compression – Why Many Lenders Are Worried About The Cost – 19%; Capacity 10%; and other 1%
When asked which initiatives are most important to differentiate their individual business from the competition, technological improvements have reduced customer service by 21% to 20%. Prices were third at 19%, followed by Marketing at 11%, Fastest Schedule at 10%, and Artificial Intelligence at 9%.
When it comes to consumer appeal of mortgage products, 38% said an improved customer experience is key. Lower borrowing costs were reported by 23%, followed by fully digital closings at 22% and fast closings at 18%.
"While the way forward is still unclear, mortgage lenders prepared for anything have the best chance of doing well in the market," said Brian Simon, president of three Altisource subsidiaries, including Lenders One, in a press release.