Consumers Set Record for Online Loan Apps
An executive with Mequon, Wis.-based technology company Mortgagebot said even with Hurricane Sandy impacting business in November, the company still expects that 1 million loan applications will have been submitted through its Enterprise end-to-end lending platform by yearend.
Through October, the company had already surpassed its previous record of 725,000 applications submitted during 2010. In 2011, approximately 600,000 applications came through the system.
And online is the place mortgage companies have to be do business in the future, said Matt Cotter, senior vice president of sales and marketing for Mortgagebot.
The company said more than 40% of its clients take more than one-quarter of their applications online.
It is a testament to the growth in the consumer-direct channel that the one million application mark will be surpassed, he declared.
The record-low interest rates which permeated the market this past year have certainly helped the growth as consumer-direct is the channel of choice for many consumers who look to refinance.
Another factor is one that has been much talked about—that the current generation of consumers is more comfortable doing all sorts of transactions online.
And it is not just refinance borrowers, those who already have some familiarity with the mortgage process, making application online. First-time homebuyers, too, are using these websites, Cotter said, adding that in general purchase application volume coming through Mortgagebot has been pretty strong.
While the rate of growth in online applications will slow as interest rates inevitably increase, this is not a passing fad. Financial institutions will have to be online in order to be competitive in the mortgage business. These companies will need to figure out ways to capture additional market share as application volume declines, he noted.
The Internet is the fastest growing channel and originators need to figure out how to leverage that in a way consumers feel comfortable and secure doing business with you. And that includes the specifics of the Web presence.
“A big change has been that the level of functionality of these websites has continued to increase and that gives consumers a lot more confidence in doing business with their institutions online.
“And we’ve seen this with every online trend around financial services. The more functionally rich these applications get, the more they get adopted, and I don’t think online mortgages are any different,” he said. And for those who already aren’t there, starting up in this segment of the consumer-direct channel might be tough.
While there are those who said originators need to be able to do business through smartphones and tablet devices, Cotter said consumers tend to use those devices more to shop rather than submit applications, because of the nature of inputting information on them.
The company noted that rate searches from mobile devices have grown to 623,410 performed through October, up from just 83,821 for all of 2010.