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Key Mortgage Lending Trends to Watch Out for in 2022

The economy continues to rebound markedly from pandemic fears, and people should hope the market stabilises in 2022 when more housing becomes available. Home sales are expected to pick up as buyers feel the urgency of expected interest rate hikes along with price increases in 2022. According to a published report, home sales will decline by 2% in 2022, mainly due to higher mortgage rates.

A continuation will result in fewer new homes on the market, meaning that even with interest rates rising, we may continue to see record selling prices. The slow pace of rising rates and prices will squeeze out buyers at the bottom of the market. If rates remain low, this could be a trigger for even stronger demand for home purchases. If so, we could see substantially higher rates before the end of the year.

Top lending trends of 2022

  • Green mortgages

    As mortgage lenders see a growing number of homeowners and buyers who are focused on sustainability, the demand for green mortgages will only become more pronounced. One of the big reasons for this is that it's not just wealthy urbanites who are concerned about sustainability. Borrowers of all ages and income levels are focused on environmental issues, so, if your business wants to stay ahead of the curve, you'll need to start offering these loans as soon as possible.

    As an increasing number of homeowners across the world are now considering installing measures to make their homes more energy-efficient, many banks and building societies are beginning to offer green mortgage products.

    The main reason for the increase in borrowers opting for green mortgages is because they are more environmentally friendly, and this helps them lower their carbon footprint. Additionally, they also come with lower interest rates.

  • Streamlining processes with technology

    Modernizing your process is another great way to boost profitability. More and more clients will be looking for ways to handle their mortgage needs all by themselves. They'll want self-service options, such as using an app or checking an account dashboard, so they can pay their bills, check their credit score, change their address, and perform other tasks without having to track down an employee.

    According to Zillow Research, millennials accounted for 43% of all homebuyers in 2020. And to meet their demands and connect with new-age users, the best way is to bring operations online at a much bigger scale to improve visibility.

    The cloud allows companies to store data on an external server instead of a physical hard drive located in the office. It's a more secure way to protect information, and it allows employees to access that critical data anywhere in the world. This means that companies that embrace the cloud will be able to offer employees greater flexibility and a better work-life balance by allowing them to work remotely.

    Technology integration for lending can be used to predict the success rate. It makes it easier for borrowers who have limited access to credit or no knowledge of how credit works without having a co-signer.

    For example, a lender could use AI/ML algorithms, which analyze historical data to determine if someone has a history of paying back their loan on time before they decide whether or not to approve.

  • Dedication towards personalized customer experience

    Customers are going to expect more from their mortgage lenders as more and more businesses implement sophisticated customer service solutions. The key is for mortgage lenders to find ways of using technology that directly benefits customers — whether by improving their experience or offering them new services.

    When consumers are looking for a loan, they usually start their search online. It is important that the website is easy to navigate and contains all of the information that people need when they're searching for a loan online. Also, if the website is optimised the people who are looking for loans online can easily find it on Google and other search engines.

    Lenders are now more focused on understanding the needs of the market, with an agenda to build a customer persona based on the following parameters.

    • How to use automation to stay on top of what your customers need
    • How to use data insights to delight your customers
    • How to increase customer retention through better service

    Investors looking to further improve the borrower experience in this rapidly changing environment will want to understand the latest developments in the industry, what parts of the mortgage process can be improved, and the next potential innovations.

    As the dust in the post-pandemic world has begun to settle, the mortgage market is also being affected by a number of broader technology trends.

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