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January 16, 2024

The Technology Partner Lenders Need Now

Lenders need a technology partner capable of assuming a strategic role, guiding their approach to navigate the future market landscape.

Things change fast in the U.S. housing industry. A basis point drop in interest rates can light up the phones in the lender’s shop with new refinance business. A new loan product can remove a logjam that was holding up unmet demand.

Lenders are often told that they need a competent technology partner but given the complexity of modern loan origination technology, that’s something they already know. What they don’t need is a partner who will sell them tools for yesterday’s mortgage market. They know this, too.

Investing in technology to meet today’s demands is short sighted.

What lenders really need is a partner who can take on a more strategic role and help them decide how they want to approach the future market.

And a new market is coming.

Comments by the Fed following its most recent meeting have given lenders plenty to be optimistic about and could mean that the market turns earlier in 2024 than previously anticipated. But do lenders have the tools they need now to succeed in that market when it arrives?

What may be coming next for the housing industry

In a climate where economic predictions often resemble roller coaster rides, the Federal Reserve's latest decision not to raise interest rates signals a potential turning point for the U.S. economy.

This move, hinting at a future of easing inflation fears and possible rate reductions, could be the spark needed to ignite significant financial activity, particularly in the mortgage sector.

The Federal Reserve's pause in rate increases hints at an easing of inflation fears, a welcome change that could have far-reaching implications. This change is more than just a momentary respite; it's a signal that we may be entering a period of economic stabilization.

The prospect of the Federal Reserve reducing rates, even marginally, in the coming year is a significant development. In the world of finance, even small fluctuations in interest rates can have a profound impact. For mortgage holders, this could be the catalyst for a refinancing boom.

Imagine a scenario where even a slight drop in rates prompts thousands of homeowners to refinance their mortgages. This isn't just a theoretical possibility; it's a likely outcome given the sensitivity of the mortgage market to interest rate changes.

The effect of this could be swift and substantial, injecting new energy into the housing market and, by extension, the broader economy.

The most intriguing aspect of this situation is the speed at which it could unfold. This isn't just about the mechanics of financial markets; it's about human psychology. Once the first few homeowners start refinancing, word will spread, creating a domino effect. Mortgage holders, sensing an opportunity to reduce their interest payments, will likely rush to take advantage of the lower rates.

If the predictions hold true and we see rate reductions in the coming year, the impact could be significant and swift.

The partner lenders need now

So, what does this suggest about the technology partner lenders should be seeking out now?

As the business comes back, lenders are going to want to have more control over how they build their businesses back up. Instead of hiring back the staff they’ve lost over the past 18 months, many will look for technological solutions.

That’s one of the reasons we have invested so heavily in the integration layers and APIs we’ve built into our MCP loan origination system. The ability for the lender to quickly add a new tool or partner to their core system is vital if they hope to control how they grow their company.

We expect to see this very clearly around the lender’s loan underwriting process. With professional underwriters completing two and a half applications per day, on average, this has traditionally been an expensive bottleneck for the lender.

New technology is giving lenders more power than ever before to quickly capture borrower data, perform in-depth analysis and compare results to a host of possible loan programs and investors. With the right workflows, tech can empower underwriters to finish 5 or more applications per day, granting lenders higher efficiency.

Whether it’s in the underwriting department or elsewhere in the company, the right technology vendor will open the door to whatever opportunity the lender wants to capitalize on.

The wrong partner will act as a gatekeeper, channeling the lender’s business down the path that makes the developer the most money.

If you’re ready to have an honest discussion about where your bottlenecks are and how Mortgage Cadence can increase your efficiency before the cycle turns and you get too busy, reach out to us today. Now is the time to prepare.

By Joe Camerieri, EVP, Sales & Strategy at Mortgage Cadence 

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Mortgage Cadence: 
Alison Flaig 
VP, Marketing 
(919) 906-9738