The housing market is booming. More individuals are buying real estate, leading to more home loans. The need for mortgage loans has never been higher, creating significant opportunities for professionals working in the industry. 

In order to meet customers’ demands, the lending industry has embraced new trends that have changed how it operates. These trends include the following:

Third-party solutions

Banks and lenders constantly look for more efficient ways to streamline processes, and third-party data providers are leading the charge. These companies have access to an incredible amount of information about individuals’ lives and can offer insights into creditworthiness, purchasing ability, and more.

Third-party software allows banks to do everything from verifying income and assets to managing documents and title verifications to updating loan status. This technology has been increasingly adopted by both small and large banks across the United States, as it saves time and money while improving customer satisfaction.

Nonqualified lenders return

Nonqualified mortgages have been a massive help to first-time homebuyers in the past. But they fell out of favor after the housing bubble burst, and the government began to regulate them more strictly during the recession. However, as liquidity returned to the market post the Covid-19 pandemic, investors are again interested in non-QM loans. 

This is good news for buyers who previously couldn’t access traditional loans because they had bad credit or didn’t have a large enough down payment. However, lenders need to ensure they’re protected if the buyer defaults on their mortgage. 

All-in-one real estate services

In the current state of the real estate industry, services such as escrow, inspections, and home insurance are separate entities. This makes the home-buying process longer and more complex. According to the National Association of Realtors, 79% of buyers support the concept of a one-stop shop for real estate transactions. 

The good news is that plenty of companies are trying to make their services easier to access. Some real estate companies are joining forces with third parties or acquiring the services of existing companies to make this a reality. 

Nonbank lenders gaining popularity 

One of the biggest trends in the mortgage industry is the rise of nonbank lenders, becoming more prevalent year after year. In 2015, nonbanks had a market share of around 50%. By 2019—before the global pandemic—the figure was 58.9%, and by 2020 it was 68.1%.

The growing popularity of nonbanks can be attributed to their tech-first approach. Nonbanks use technology extensively to work with buyers and sellers, which gives them a competitive advantage in the market. 

New platforms from sub-servicers 

The US subservicing market, which handles mortgage payments and collects payments from borrowers, is expected to grow at double-digit rates in the next few years. The following factors contribute to this growth: 

– Outsourcing has become increasingly popular in the financial services industry as a way to reduce costs, given higher levels of scrutiny and regulation.

– New service providers lack industry knowledge, which is why they outsource servicing.