‘A Dream Home’, one’s lifetime ambition is most often fueled by mortgage companies. Lenders ensure all checks and balances are done when processing documents, enabling the home seekers to inch closer to their dream.
The US mortgage industry is under the constant influence of macroeconomic parameters viz. interest rates, inflation, economic policies, and geopolitical stability. These external factors have a huge impact on the financial health of mortgage companies.
With whispers of a potential recession looming, mortgage lenders are caught housing a volatile market. The Federal Reserve, on June 15, in an earnest attempt to curb soaring inflation, raised interest rates by 0.75%1. The biggest increase since 1994 and the third rise in 2022. As an aftereffect, mortgage rates saw a steady rise for 3 weeks followed by a slight drop. However, despite these falling rates, purchase demand has seen no effect.
The cyclical nature of the housing industry, due to these external factors, has a detrimental effect on mortgage companies, impacting their bottom line adversely.
These economic headwinds need to be sensitized by these mortgage companies to ensure they have a strong plan of action to protect their bottom line. However, given the growing uncertainty in the market, mortgage lenders looking to increase efficiency and profitability, have no clear path in sight.
To chart a course and navigate through these times, the 6 key strategies that mortgage lenders can adopt to help drive profitability in such volatile times are, viz:
- Optimize resources
- Leverage technology to reduce Time To Market
- Innovate new products to capture market
- Extend partnerships to minimize risks
- Transparent systems with accountability
The Mantra to ensure optimal management of costs to drive profitability is “Automation”. We call it ‘Mortgage Intelligence’. With strong AI and ML algorithms and deep domain expertise, one can deploy Intelligent Document Processing (IDP) solutions to optimize costs and boost the bottom line.
IDP solutions leverage the power of cognitive automation at its core, to help mortgage companies efficiently adapt to volatile market conditions. Adopting technology in key functions of document processing, helps lenders boost growth by:
- Reducing the overall cost of processing
- Faster turnaround time due to increased STP
- Streamlining document tracking
- Improving accuracy with minimum manual intervention
- Enabling business resilience
- Improving employee experience
- Improving compliance and governance
Many mortgage companies experience the challenge of profitability margin compression, especially in the cost of loan origination. The rising rates and highly competitive market make the situation more difficult to overcome. A leading bank in the USA faced similar issues while managing a large onshore team with technology that was not scalable. This resulted in slower closing cycles, reduced quality, and higher operational costs. They chose to adopt an Intelligent Document Processing solution, DocVu.AI, as a solution to help regain their profitability margin and deliver better outcomes to their customers.
This ‘wuthering storm’ of cyclical uncertainties and external factors brings mortgage companies an impending uncertainty to ensure growth and profitability. The solution lies in the Profitability Mantra- Mortgage Intelligence. Hyper-Automate to reduce costs, boost profitability and ensure everyone’s dreams are fulfilled.