Welcome to 2015, which promises to be one of the most interesting years in the mortgage industry in recent memory. From regulatory changes, to the shifting economy, to the long tail effects of the economic boom in places like San Francisco and New York (and the continuing downturn in rural areas), the next 12 months are going to be a roller coaster ride. And while my crystal ball isn't perfect (I should have bought Apple shares at $25 back in the day), I'd like to share some of the trends that I see for the coming year.
1. The refinancing market will continue to decline and have less and less potential because in many ways it's already pretty tapped out. As a result, lenders will further emphasize their focus on purchase originations. This is a big deal, because it will affect how lenders staff their organizations and organize themselves to process transactions as quickly as possible.
2. We will see an increase in the direct-to-consumer mortgage business. Driven in part by refi contraction, over the next 12 months lenders will invest in establishing more sophisticated online offerings that cater to the self-service consumer, experimenting with search engine marketing and lead acquisition from mortgage lead generation platforms, and operating loan officer call center environments.
3. The number of online mortgage applications will skyrocket. That's because improvements in technology, particularly on the mobile front, have revolutionized how people handle their finances. Home buying is no exception, and over the last year we have seen a significant uptick in the number of tools that facilitate these kinds of transactions. Expect even more technology acceleration in 2015.
4. The automated verification phenomenon will continue to gain traction. In the new mortgage economy, speed is everything. That means that the links in the chain that have traditionally been bottlenecks are being addressed further upstream in the origination process because lenders know that speed is a critical element of their financial success. We can expect to see more of this in 2015 as technologies improve, and as consumer comfort with sharing confidential data online increases.
5. The digitization of the consumer experience will become more traditional, and it will pick up major traction this year. While various technologies to transform the mortgage process into a paperless chain of events have been in development (or even on the market) for a few years, it is only now that the "perfect storm" of consumer acceptance of new technologies, the ability of mortgage companies to rollout new digital tools, and nearly universal mobile broadband access has created a climate in which people apply for mortgages can have a completely digital experience. This is important for the industry, because it will fundamentally realign how companies provide support - for example, online help will be infinitely important than traditional call centers - and allocate their resources.
Of course, there is no perfect way to predict what will happen over the next 12 months. We have no idea what the political climate will look like, how the economy will fare, or whether or not the tech boom will continue to drive home prices to record levels. But we do know that there is no putting the genie back in the bottle. Consumers now expect to have seamless online experiences while applying for and tracking their mortgages, and forward-thinking lenders are implementing the tools that they will need to meet this consumer demand. So grab your seat, strap in, and put your helmet on. 2015 is going to be a wild ride!