Survey: Most Lenders Expect Mortgage Loan Production Costs To Rise In 2017

Posted by Patrick Barnard on November 09, 2016 No Comments

In a survey of more than 100 executives conducted by mortgage software company Capsilon during the Mortgage Bankers Association’s (MBA) Annual Convention and Expo held recently in Boston, 70% of mortgage lenders say they expect loan production costs to continue to rise in 2017.

Surprisingly, only 7% of respondents report that they expect loan production costs in 2017 to be “somewhat lower” or “significantly lower” compared with this year.

More than nine out of 10 respondents say they are somewhat or very interested in technology that automates key steps along the mortgage loan process, and 86% expect to spend more in 2017 versus 2016 on technology to reduce loan production costs by enabling a digital mortgage process.

More than four out of five mortgage lenders say they plan to increase spending on automation technology to reduce loan production costs, and that same number says implementing the right technology is a top concern.

About 45% of respondents say automating key steps in the loan production process is most important, 37% say automating both the consumer experience and the loan production process is equally important, and 15% say automating the consumer experience during the application process is most important.

Only 3% say their companies are not planning to enable a digital mortgage process.

When asked what issues their companies are most concerned with, 73% of respondents say implementing the right technology, 51% say rising loan production costs, 36% say improving customer experience/customer satisfaction, and 16% say longer loan turn times.

Interestingly, less than 10% of respondents say risk of regulatory penalties, hiring and retaining employees, and complying with the TILA-RESPA Integrated Disclosures rule were major concerns.

“The survey results clearly indicate lenders expect loan production costs to continue to rise, and they are looking to technology to reduce costs with automation,” says Sanjeev Malaney, CEO of Capsilon, in a statement. “In developing their digital strategies, lenders are right to focus on automating key steps in the loan production process, as this is where technology can deliver the speed, data integrity and cost savings they need to gain a competitive advantage.”

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