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5 Trends Revolutionizing the US Mortgage Industry

5 Trends Revolutionizing the US Mortgage Industry
Image by Vicki Hamilton from Pixabay

The housing market has faced significant change over the last decade, and it’s only continuing as social pressure for change mounts up, and housing demand rises. To cope with demands, heavily digitized nonbanks dominate the market because they can provide the digital interfaces users demand in 2022. As well as this, there is a series of other trends changing the face of the US mortgage industry – continue reading to find out more. 

Third-Party Data Providers

All types of banks across the US have invested in third-party technology designed to streamline several processes — workflow management, income, asset verification, document management, title verifications, and much more. The aim of using third-party services is to reduce the cost to lenders and improve the customer experience. For example, with electronic asset verification, lenders can gain access to real-time borrower bank account information, which allows them to quickly draw accurate data surrounding affordability and spending habits. 

Nonqualified Lenders Making a Return

When the housing market in the US was stable, nonqualified mortgage (non-QM) lenders were diminishing under tighter regulations and scrutiny. However, alongside the market crash brought on during the Covid-19 pandemic, liquidity has flooded back to non-QM lenders. This is great news for buyers unable to access traditional mortgages, but it means that lenders need to underwrite these loans, which may bring about financial turmoil. 

Nonbank Lenders Rise Up

Nonbank lenders continue to pick up speed, with increased market shares each year. Going back to 2015, nonbank market shares were around 50%. Go back to 2019, before the global pandemic, and it sat at 58.9%. By the time 2020 rolled around, the nonbank market share was at a staggering 68.1%. One of the main reasons for this growth is that nonbanks are heavily tech-equipped, which is what buyers are searching for in 2022. 

Next-Gen Platforms from Sub-Servicers

Over the next few years, the US subservicing market will likely see double-digit growth year-on-year. The following factors bring about this increase in value:

  • Outsourced servicing is slowly being preferred over in-house, a change being sped up by higher levels of scrutiny and regulation. 
  • New service rights owners or lenders lack industry knowledge, meaning they outsource mortgage servicing. 

Bundling of Real Estate Services

In its current state, different services, including escrow, searching, inspections, home insurance, movers, and mortgage services, exist as separate entities, which only drags out the home-buying process. According to the National Association of Realtors, 79% of buyers believe a one-stop shop for real estate would make the process much more efficient. Fortunately, several real estate players are working on making this a reality by teaming up with third parties or acquiring the needed services. 

Technology is rising across all areas of real estate and is providing the perfect answer to the social demand for digitization. As these trends continue, it will be interesting to see where the US mortgage industry sits in five years. 

Featured Image by Vicki Hamilton from Pixabay