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The mortgage demand has dropped by 2.5% on the highest rates in nearly five years. The total number of applications was 3.3% lower in the week beginning 01 May 2018 than it was a year before, with homeowners and buyers taking a pause as rates continue to rise. With signs indicating that it could be a tough time for lenders, it is vital for them to make a greater effort to stand out from the competition. Companies such as Amazon have brought a major paradigm shift to the way buyers access and use information, creating a major wake up call to mortgage lenders to turn to technology to meet clients’ changing demands. One way to do so is to offer comprehensive, dynamic, user-friendly apps that offer users important information, catered to their personal needs.

Buyers Demanding Online Service

According to mortgage news site MReport, two recent studies provide an excellent example to lenders of the need to ace their tech offerings. One study “found significant shifts in borrowers going online to complete their applications, with first-time buyers’ use of digital channels rising from 22 percent in 2016 to 37 percent in 2017. Experienced borrowers’ digital utilization grew from 30 percent to 44 percent over the same period.” Lenders with a strong digital presence are as attractive to buyers wishing to raise finance through equity release, as they are to those checking out the housing market for the first time. The second study found that 58% of younger borrowers are using their computer to access information, while 48% are doing so on mobile devices.

Borrowers Have More Options to Explore

The digitalization of the mortgage market means that buyers have a far wider array of choices. If in the past, buyers normally turned to their bank to discuss mortgage options, today, they are far more likely to find products that match their needs online. Lenders, therefore, have to develop ways to make their digital offerings stand out.

Apple Taking the Digital Mortgage Plunge?

Computerworld recently reported that Apple is considering working alongside Goldman Sachs to launch a credit service via Apple Pay. As noted by writer Johnny Evans, “  it seems possible Apple is seeking to explore the same space as the emerging ‘challenger banks’ — tech companies offering financial services that provide compelling alternatives to those offered by conventional banks.” The extent and type of credit to be offered evidently remain to be seen, but mortgage companies are undoubtedly waiting with baited breath to check out the impact.

A Lesson from Trussle

In the UK, online mortgage broker Trussle is showing lenders how to do it. The company recently closed £13.6 million in Series B funding, largely led by Goldman Sachs. Trussle (which was launched in 2016) offers an exclusively online mortgage, using massive data and machine learning to offer buyers the chance to find the best interest rates and advising them to ‘switch’ mortgages when a better deal or lower interest rate arises. The technology supports buyers at every stage of the process - from the time they are just thinking of buying, to the stage at which they may be interested in refinancing their existing mortgage.

What the mortgage industry comes up in terms of its digital offerings remains to be seen. One thing, however, is clear: those who continue to rely on face-to-face banking will be left behind in an era of tech-savvy customers who demand speed, efficiency, and personalized advice. Trussle has been reaping success since 2016 and it is only a matter of time before traditional lending institutions begin stepping up their tech game if they want to stay in it.