July 24, 2024

Mortgage Brokers: Overcoming Today’s Challenges

Today, volatile market conditions continue to pose a challenge for mortgage brokers. As the market shifts, so do mortgage products, with withdrawals happening in shorter periods and lenders of all sizes playing catch-up to new market conditions. 

But it’s important to remember, as CEO of Acre Justus Brown notes, “This is all out of a broker’s control”. 

“It’s been challenging for them, and led to many looking internally at their own operations for new ways to add value to clients while also being more efficient,” he continues.

While it has been a challenge for mortgage brokers, mortgage provider Freddie Mac indicates that conditions may be slightly improved throughout the rest of the year. 

Its forecast suggests an increase in both purchase and refinance volumes throughout 2024 and heading into 2025, while the monetary value of loan originations is also expected to increase as property prices rise alongside an increase in home sales.

This is a good sign for a mortgage industry caught up in the tumult of post-pandemic volatility, but despite the improvement, the market still faces some headwinds. 

These include low inventory numbers and persistent tight supplier conditions despite stronger demand from buyers. 

Mortgage brokers: Driving efficiency through technology   

As mortgage brokers grapple with these lingering headwinds, more and more professionals in the industry are seeing the value of technology in driving efficiencies to minimise the current macroeconomic impact. 

As Brown puts it: “Market conditions have led to a growing recognition of the role technology plays in changing the industry, and probably their current tools don’t meet the needs of modern broker businesses.”

Today, among the leading technologies driving hype in all areas of financial services is generative AI (Gen AI), but while the prospect of Gen AI’s capabilities for driving efficiencies may be alluring to mortgage brokers – Brown reminds us that in an industry as regulated as the mortgage sector, adhering to regulations must come first. 

“It’s easy to get wrapped up in the hype of AI but it is early days for the technology,” he says. “We must bear in mind that financial advisors operate in a regulated world. It’s not as simple as telling the computer to make a recommendation and sending that to the client – there are checks and balances to make sure you are compliant at every step of the advice journey. 

“Like with so many areas where Gen AI is promising, a general-purpose LLM like ChatGPT is not trained with specific enough data to provide useful outputs – or at least would require heavy rewriting to be compliant.”

Indeed, while Gen AI can not be leveraged fully by mortgage brokers for the sake of compliance, in the future, Brown can “envisage a future custom-trained system which uses past cases to understand how to describe customer situations”. However, “we’re not there yet”, he adds. 

Even though Gen AI cannot be leveraged to as full an extent in the mortgage sector as it is in other areas of the financial services industry, there are still technologies supporting brokers in their battle against economic volatility.

Advanced customer relationship management (CRM) tools are helping brokers maintain long-lasting relationships with their clients, streamlining processes and enhancing business operations by acting as a central hub for marketing, sales and other client-related activity.

Elsewhere, loan origination software is helping brokers streamline the entire loan origination lifecycle, reducing manual processes and paperwork while improving efficiency and accuracy.

Other technologies brokers are leveraging include document signing software, process automation tools and document collection tools – all of which are helping brokers drive efficiencies while remaining competitive. 

Mortgage brokers: Meeting modern consumer needs

Of course, while technologies support combatting market volatility for mortgage brokers, their use is vital in meeting consumer demands, because, as market conditions shift, so too do consumer expectations.

“At times when interest rates are rising to touch 15-year highs, the pressure is on mortgage brokers to find the best deal for clients without putting them under extreme financial pressure or at risk of losing a home,” Brown says. 

“By investing in innovative technologies, you can build a far clearer picture of each client’s financial situation and brokers will be empowered to offer holistic financial advice, including protection, insurance, and wills, improving homebuyer’s options and easing the burden for those seeking new mortgages or remortgaging, therefore strengthening the relationship between broker and client.”

How mortgage brokers can stand out in the crowd

Amid increasing consumer demand, the need for mortgage providers to deliver diversification to attract more clients is arguably stronger than ever. 

This need to diversify is particularly necessary in organisations with concentrated sources, as Brown explains. 

“In this tough economic landscape, I see more brokers than ever interested in diversifying their lead sources, especially if they are concentrated today,” he says. 

“Technology is the great enabler in driving new business and can mean the difference between standing out from the crowd and being left trailing behind. For example, we’ve started helping people re-visit their websites and lead-capture and qualification processes, with great results.”

Brown concludes: “The digitalisation of the market means we’re seeing big networks and clubs like The Right Mortgage, Cornerstone, Paradigm and PMS champion the use of new technologies like Acre to thousands of brokers.

“It is a new approach to improving ways of working, saving brokers time, giving greater operational efficiency and fuelling easy adherence to rules and regulations like Consumer Duty.”


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