Today, volatile market conditions continue to be a challenge for mortgage brokers. As the market shifts, mortgage products change, withdrawals are made on shorter terms, and lenders of all sizes are trying to keep up with new market conditions.
But as Acre CEO Justus Brown points out, it's important to remember that “all of this is outside the broker's control.”
“This has been a challenge for them, leading many to re-evaluate their operations and look for new ways to add value to their customers while improving efficiency,” he continues.
This has posed challenges for mortgage brokers, but mortgage provider Freddie Mac has suggested the situation may improve slightly through the rest of the year.
The company's forecast predicts that the volume of both home purchases and refinancings is expected to increase from 2024 to 2025, and as property prices rise alongside rising home sales, the monetary value of loan disbursements is also expected to increase.
That's a good sign for the mortgage industry, which has been caught in a turbulent post-pandemic turmoil, but despite the improvement, the market still faces some headwinds.
These include low stock levels and a still tough situation for suppliers despite rising demand from buyers.
Mortgage Brokers: Driving Efficiency Through Technology
As mortgage brokers grapple with lingering headwinds, a growing number of industry experts are recognizing the value of technology in driving efficiencies and minimizing the effects of current macroeconomic trends.
Brown said: “Market conditions are driving increased recognition of the role technology will play in transforming the industry, and current tools may not meet the needs of a modern brokerage business.”
One of the key technologies currently gaining attention across all sectors of financial services is generative AI (Gen AI), but while the prospect of Gen AI's ability to drive efficiency may be appealing to mortgage brokers, Brown reminds us that in an industry as highly regulated as the mortgage industry, compliance with regulations must remain a top priority.
“It's easy to get caught up in the AI hype, but the technology is still in its early stages,” he says. “Financial advisers need to remember they are operating in a regulated world. It's not as simple as telling a computer what to recommend and sending it off to the client. At every stage of the advice journey, there are checks and balances to ensure it complies with regulations.”
“As with many areas where Gen AI shows promise, general-purpose LLMs like ChatGPT are not trained on specific enough data to provide useful output, or would at least require significant rewrites to comply.”
Admittedly, mortgage brokers can't take full advantage of Gen AI for compliance, but going forward, Brown says, “I can envision custom-trained systems in the future that use past examples to understand how to explain a customer's situation.” But, he adds, “We're not there yet.”
While the mortgage sector isn’t able to take full advantage of Gen AI as much as other areas of the financial services industry, the technology is still there to support brokers as they battle economic uncertainty.
Advanced customer relationship management (CRM) tools help brokers maintain long-term relationships with customers and streamline processes and enhance business operations by acting as a central hub for marketing, sales, and other customer-related activities.
Loan origination software also helps brokers streamline the entire loan origination lifecycle, improving efficiency and accuracy while reducing manual processes and administrative tasks.
Other technologies brokers are leveraging include document signing software, process automation tools and document collection tools, all of which help brokers become more efficient while staying competitive.
Mortgage Brokers: Meeting the Needs of Today's Consumers
Of course, technology can help mortgage brokers navigate market volatility, but as market conditions change, consumer expectations also change, so it's essential they leverage technology to meet consumer demand.
“At a time when interest rates are rising to a 15-year high, mortgage brokers are under pressure to find the best terms for their clients without putting them under extreme financial pressure or at risk of losing their home,” Brown says.
“Investing in innovative technology provides a much clearer view of each client's financial situation and enables brokers to offer holistic financial advice including protection, insurance and wills, expanding choice for homebuyers, easing the burden on those seeking a new mortgage or refinancing and strengthening the broker-client relationship.”
How Mortgage Brokers Stand Out in the Crowd
As consumer demand increases, it is becoming more important than ever for mortgage lenders to diversify in order to attract more customers.
As Brown explains, this need for diversification is especially important in organizations with concentrated sources of information.
“In this tough economic climate, I think more brokers than ever are looking to diversify their lead sources, especially those that are currently concentrated in lead sources,” he says.
“Technology can be a huge force in driving new business and can make the difference between standing out or falling behind. For example, we've started helping people re-engage with our website, lead generation and qualification processes and we're seeing great results.”
Brown concludes: “The digitalisation of the market is driving large networks and clubs such as The Right Mortgage, Cornerstone, Paradigm and PMS to implement new technologies such as Acre across their thousands of brokers.”
“It's a new approach that will improve the way things are done, save brokers time, increase operational efficiency and make it easier to comply with rules and regulations, including consumer mandates.”
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