Are homeowners ready to exchange LOs for a fully online mortgage?

Seventy-two percent of (Canadian) mortgage shoppers get mortgage advice in person, but the majority would opt out of talking to a LO, in exchange for a fully online mortgage. That is, if it would save them money, according to a new survey by Rates.ca.

Before you dismiss our northern border neighbors, you may want to consider their similarities as well as the differences.

Mortgage lending in Canada is dominated by a handful of major banks, so there are key differences between our markets. For example, Canadian borrowers are not as concerned with what lender they settle with, only 23% cited the lender’s brand name as being an important consideration when selecting a mortgage, whereas Americans are arguably more brand-savvy since there are countless options. Still, borrower trends are very similar.

Do borrowers want to opt-out of the human experience altogether, though? Not really.

“For the first time we can recall, prospective mortgage shoppers revealed three things about themselves,” the study states.

Those three things are:

  • 18% said they’d prefer a lender that processed their mortgage all online — so they didn’t have to speak to anyone
  • 16% said they would not deal with a lender that doesn’t offer in-person or phone support, regardless of the rate
  • 45% said they’d only consider such an online-only lender if it meant saving money

“As lenders make it easier for people to get great mortgage advice directly from their websites, that will motivate more consumers to use such technology. This trend will lead to lower personnel costs among “digital” lenders and lenders will pass on the savings in the form of lower interest rates,” the study states. “In the next few years, more and more lenders will create end-to-end “digital mortgages” to make these savings possible. In fact, they already exist now, but it’s very early days.”





Here’s how many flips and vacant homes there are in Oakland

The Moms 4 Housing struggle has put Oakland’s lack of housing for low income working mothers under the microscope. Up NEXT chronicled Moms’ tragic tale, in which they were evicted from their squat last week. We don’t know where Moms will take their families, and this brought to light a question many metros will face in the coming months. How much affordable housing is out there?

While Moms 4 Housing’s story may have ended, the San Francisco Chronicle, along with ATTOM, dug a little deeper with this fascinating case study that will make you angry, sad and smarter than before.

Low-income families need homes, but developers are building, and those new builds do inject life into local economies. The article lays it all out.

Yet how bad is it? In the San Francisco-Oakland-Hayward region, ATTOM found that of the 1.2 million residential properties, 4,539 were vacant in the fourth quarter of last year, or 0.38% of the housing stock. Almost 300,000 of those residential units were investment properties, and 3,027 of those, just over 1%, sat vacant, according to Attom. That percentage is ranked 151st out of 158 metro regions.

If these numbers can be translated to many other larger metros in the U.S., and we fear they do, we can expect a lot more conflicts to come, and likely on a much larger scale than the Moms 4 Housing saga.

Three lending takeaways from three housing lessons

Millionacres is quickly making the must-read list here at Up NEXT. The real estate blog is run by Motley Fool and the content is pretty great. Don’t worry you don’t have to sign up or anything, we’ll keep you fully up to speed here at Up NEXT.

Check this lede from Maurie Backman: “It’s been about 10 years since the housing crisis slaughtered the real estate market and forced millions of homeowners into foreclosure. And since housing has largely recovered on a national level, it’s easy to chalk that calamitous bubble burst up to a confluence of unfortunate circumstances.”

Her piece is Three Lessons Learned from the Housing Crisis and her point is that, if borrowers don’t check themselves, we run the risk of the same crisis happening again. 

Here are those lessons:

  1. Don’t take on too much house
  2. Always have emergency savings 
  3. Don’t assume your home’s value will climb

Wait! Before you change the record, there are some messages in there for lenders too. So Up NEXT will do a quick mini-summary called Three Reasons You Should Read This Article.

  1. Better understand your borrowers. We should educate ourselves on how our borrowers educate themselves. They are out there searching and researching. Familiarize yourself with what they’re learning. Read what they read.
  2. Put recession possibility in perspective. Borrowers are being told to prepare for a recession. As a lender, are you prepared? Mortgage lending will take a hard hit in a downturn. Start preparing now and stay prepared.
  3. Consider what borrowers should know about expected appreciation. We feel Backman’s third point is too cautionary and simplified for her audience. It’s safe to tell borrowers to assume their home’s value will climb. Be honest with your borrower: chances are home values will increase as all markets are predicted to climb. A recession would change that, however, but there is no reason not to give some hope to your borrower’s ambitions.
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