What are the steps lenders are taking to expand beyond the typical mortgage cycle and maintain high revenue levels?
There was a time when companies operating in the mortgage lending industry saw their business go through a very predictable cycle each year. From a quiet first quarter to the spring and summer buying seasons and on into the fall conference and budgeting season, each year was pretty much like the last. But that was a long time ago.
COVID changed all of that, disrupting the normal home buying patterns and driving people out of the cities and into second homes. The resulting spike in loan volume made 2020 and 2021 two of the best years in home finance history. It’s understandable that lenders don’t want this to end.
But Fannie Mae’s home buyer sentiment reports are already indicating that more people are souring on the idea of buying a new home now. Where will the new business come from? That involves thinking outside of the mortgage box.
I’ve been hearing from a number of my contacts in the industry that lenders are looking at continuing to disrupt the normal mortgage cycle or at least keep revenues high by expanding into other lines of business. Joint venture agreements and affinity relationships are under consideration as lenders look to bring more aspects of the transaction in house to capture the revenue.
But it’s not just about the home finance transaction, or any single transaction for that matter. Recently, Rocket has ramped up its cross-selling efforts into the auto finance arena. Meanwhile SoFi announced that it would expand into mortgage lending as part of its plan to go public.
Even established technologies are attempting to move beyond their initial use cases in search of revenue. You’ll remember that Blend, an established mortgage Point of Sale, made news when it began to expand into other products.
It’s all about offering more and, for many lenders, doing more with the technology they already have in house. Lenders who are using the new Mortgage Cadence MCP platform have a head start because the platform can support a very wide range of home finance products and origination channels.
We’re already seeing more lenders doing more with the technology they’ve already invested in. It’s a great way to keep their revenue high even as the market for refinance transactions continues to cool. It’s a trend we expect to guide lenders into the new year.
By Joe Camerieri, EVP, Client Account Management at Mortgage Cadence
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