0
0
I find it quite interesting to scan the daily headlines covering housing and mortgage lending. (I know, I gotta get a life!) Seriously, some recent headlines indicated:
- Mortgage rates tumble, but may head back up;
- Rates at 2017 low and may stay low;
- Application volume is down; but
- Credit availability is up
What’s your take on rates, the housing market, and the fate of lending in 2017? Whatever it is, rest assured with everyone jockeying for position, things will be very competitive over the next few years.
According to Fitch Ratings, the immediate future appears to belong to the big banks. Fitch says that these large banks will ultimately gain an advantage over smaller banks and non-bank lenders due to greater financial resources, pricing capabilities, and cross-sell opportunities, all supported by digital lending processes. Maybe…
Presently few lenders have full digital lending capabilities. Quicken took the lead through its Rocket Mortgage, which accounted for about 7% of their total originations in 2016. Others are now feverishly working to gain this technology. Recently, JPMorgan Chase announced that they are partnering with Roostify to develop their online mortgage capabilities.
Fitch says, the larger banks, having greater financial and information technology, may have a slight advantage. Plus, banks have the advantage of lower cost funds allowing them to price their loans more competitively, but only when they can control their costs and risks.
Rates will always be a major contributing factor in where consumers get their financing. The difference makers will be the ease of the process, timely delivery of the product, and customer service. Those with digital technology will surely have an advantage.
Will it be the large banks that take the lead? Or, will smaller banks and non-banks develop, acquire, or partner with the technology needed to compete? What about risk? Are the big guys willing to take the increased risks associated with cyber security, potential fraud, and regulatory compliance when lending online?
What about FHA lending? Will that be the scraps thrown to non-bank lenders? The game is changing, and it’s changing fast. Are you preparing to play in the digital sandbox?
