Before the pandemic digital mortgages were evolving slowly with companies taking their time to

upgrade to digital solutions. Since then, mortgage companies have demonstrated how new

technologies can fundamentally change user experiences, create new offerings and significantly

reduce the effort required to progress key mortgage activities.

Those changes have made a huge impact on what customers expect from their mortgage experience

and have raised the bar for mortgages brokers’ approach to work with clients. Part of the

digitalization is providing online services such as digital mortgage applications, digital pre approvals

and customer support. Digital mortgages mean including automation into every step of the way. The

website is also key to introduce customers to educational materials as well as the company’s

transparency throughout the process like tracking the status of the application online. In general, it

should entail a blend of physical and digital channels to enrich the customer’s experience.

Modern mortgage technology centralizes the customer.

That the traditional approach to mortgages is outdated, isn’t a surprise. A lender’s average closing

time is one of the most important factors influencing a consumer’s decision to do business with

them. Studies found that digital lenders were able to close up to six days earlier than those using the

traditional ways. Furthermore, the traditional process is not only lengthy and tedious, its reliance on

the paper-based transactions through over 30 touch points and interactions resulted in

unpredictable delays, higher costs, inefficiencies, and poor customer experience.

Digital mortgage options can play a role in creating a more equitable lending and home-buying

process for marginalized communities as well as algorithmic loan offerings can lead to less

discrimination. The National Bureau of Economic Research found that face-to-face lenders charge

African American and Latinx borrowers 7.9 basis points more for purchase mortgages and 3.6 basis

points more for refinance mortgages, adding up to $765 million per year in extra interest. In-person

lenders also rejected minority applicants about 6% more often than comparable non-minority

applicants. In the US in 2019 were African Americas denied mortgages at a rate of 16%, Hispanics at

a rate of 12% and in addition homosexuals were more likely to be denied at a rate of 73%. That is

also why digital lenders are more sought after than ever.

The figures of several survey speak for themselves as well. Over two third of borrowers are

interested in a fully digital process. Which correlates to the main borrowing demographic being

millennials and in the near future even Gen Z. 70 percent of them would prefer to submit documents

online. By leveraging digital mortgage solutions, the lending institutions can observe a 75 percent

increase in sales productivity, a 20 to 25 percent increase in the pull-through rate. The number of

digital lenders on the market increased from 5% to 38% within a year (2019-2020).

Significant regulatory change can impact lenders’ ability to innovate. Both because resources and

budget need to be directed towards regulatory compliance, and because lenders are hesitant about

investing in innovations which may be overtaken by regulatory change.

But in foresight it is to say that, digitally enabled mortgage experiences will become the norm in the

longer term.

Additionally, the pandemic has helped the innovation of digital mortgages immensely. Even though

lenders had to move to remote working customers were overall satisfied with their mortgage

experience. The industry was largely successful in adopting digital solutions to perform tasks that

were typically completed face-to-face, including e-verification of income and assets, drive-by and

automated appraisals, and hybrid closings.