Mortgage automation services - Kolkata

The U.S. mortgage rates are touching new heights every day. Last week the interest rates rose to the highest since Spring 2020. The interest rate on 30-year mortgages jumped to 3.22% in the first week of January and to 3.64% in the second week, according to Mortgage News Daily. Many believe the interest rates might continue to climb in the future.

The Fact Sheet

• According to a <a href="https://www.mba.org/2021-press-releases/october/mba-annual-forecast-purchase-originations-to-increase-9-percent-to-record-173-trillion-in-2022">forecast</a> by Michael Fratantoni, chief economist for the Mortgage Bankers Association (MBA), the 30-year, fixed-rate loans could reach 4% by late 2022.
• The MBA’s <a href="https://www.mba.org/2022-press-releases/january/mortgage-applications-decreased-over-a-two-week-period-in-latest-mba-weekly-survey">Weekly Mortgage Applications Survey</a> found that mortgage applications decreased 2.7% for the week ending 2021.
• The higher mortgage rates caused the refinance activities to decrease by 2.2%.

The rise in rates indicates continued high demands, limited supply, and rising inflation. The post-pandemic economic recovery is also a contributing factor for the upswing of mortgage rates. This had led to a drop in demand for loans and stiff competition among mortgage lenders.

Since the nine-month high mortgage rate is discouraging potential home buyers to apply for loans or to refinance, lenders are struggling to cope with the rate-related pressure. The forecasts from the bigwigs of the mortgage industry and the predicted trends have encouraged lenders to look for new ways to maintain the same margin they have experienced in the past. One solution that has emerged as the clear favorite is transitioning to automated systems.

3 Ways Advanced Systems Can Help Lenders Respond to Rising Mortgage Rates

More Scalability and Operational Elasticity

Usually, lenders who rely on legacy systems and manual work for processing loan applications hire new employees to meet the increasing workload and the record demand from borrowers. However, 2022 started with low demand for refinancing, leaving lenders with a staff that doesn’t have much to do. As a result, they are left with no other choice than to decrease the headcount.

Automation solutions offer more scalability (both horizontally and vertically) and operational elasticity to mortgage lenders as they can quickly meet the demand fluctuations without losing out on the quality of work and efficiency. When you incorporate artificial intelligence (AI) powered systems strategically, you can alter their performance depending on your need, while lowering the risk of quality degradation and saving on overhead costs associated with training.