Three Important Trends for Mortgage Lenders to Know


Mortgage lenders have an important role to play in the financial sector. They help people identify how much they can spend on a new home, thereby providing an invaluable service to people making one of the most important financial commitments they will ever make. Finding and retaining clients is nonetheless challenging for many lenders, as the market is always shifting.

Economic conditions in part determine who is ready to look for a new home. New technology changes the way lenders offer services. In order to stay on top of their game, lenders should stay mindful of these new trends for 2019. It can help them increase their knowledge of the sector and do the best job possible for their clients.

1. The Power of Artificial Intelligence

One major innovation in the financial technology (fintech) sector is the ability to use data and analytics to predict consumer needs. This technology offers a more precise picture of potential clients and products that may suit their desires when it comes to financing a new home. Instead of using a small set of indicators to find a product match, AI allows for a much wider range of information to come into play.

AI does not replace the importance of human contact between the lender and the buyer. It does, however, use automated tools to take more relevant information into account before managing a client account. Therefore, lenders can manage risk and give buyers the products they want at the same time. One-on-one contact is still essential – not only for client care but to satisfy legal requirements that regulators impose.

2. Dominance of First-Time Buyers

In 2019, the majority of those seeking mortgages will be first-time home buyers. This is not a new trend. Experienced lenders recognize that new homeowners have made up the majority of the mortgage market in the years since the 2008 financial crisis. Indeed, before the financial meltdown, first-time buyers accounted for only 40 percent of purchase mortgages. That’s risen to 60 percent.

Part of the reason why first-time buyers are so prominent now is years of purchase delays. When the economy was faltering and prices were high, many consumers put off buying a home. Now, the time has come for them to finally enter the housing market. For mortgage lenders, this means taking additional care when educating clients on financial products and recommending options, since these consumers are less experienced than those who have held mortgages in the past.

3. Buyers Have Less Power — But It’s a Buyers’ Market

Borrowers in 2019 are going to face higher interest rates. Last year’s 30-year fixed mortgage rate reached the highest rate it’s been since 2011. Experts predict that rates may stay high, meaning it is harder for borrowers to finance those new purchases.

That decreased buying power comes with a potential benefit for those looking to get into a new home: less competition. If fewer people are buying then there are more options of properties to buy, and fewer people to compete against when it comes time to place an offer. For lenders, it means working closely with buyers to ensure they have a sound understanding of what they can afford while staying optimistic about the choice they may have in the housing market.

Lenders Should Remain Aware of Changing Trends

Mortgage lenders have to understand how the market is shifting in order to stay relevant to clients. Meeting their needs, offering better financing packages, and demonstrating a thorough understanding of the housing sector, can all help clients to feel at home. For lenders, that means nurturing a happy client who will trust them with their financial portfolio — for their current and future home purchases.

Launch Your Career

Select your education program

Select your state

Select your course