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Simon Tahan: A world of opportunities for home lenders in Connecticut

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Simon Tahan Webster BankAmid the Covid-19 pandemic, demand for end-to-end digitization in the homebuying/lending process is accelerating like never before. Potentially reshaping the entire industry, it could present a world of opportunities for home lenders and homebuyers alike – just in time for the fall homebuying season.

Favorable market conditions  
Low interest rates. Growing inventory levels. Lower Covid-19 infection rates. As these trends contribute to a positive outlook for Connecticut’s real estate market, buyers and sellers alike are getting comfortable with the current environment. They’ve emerged from their quarantines, creating tremendous market potential. As a result, inventory of current homes islikely to increase. Homebuilders, too, may seize this opportunity to capitalize on favorable conditions, further boosting inventory with new housing.

The first wave of millennial homebuyers 
Millennials, who may have delayed homebuying, have finally entered the housing market. First-time buyers accounted for 34% of sales in July 2020, up from 32% a year earlier; older millennials, in particular, are transitioning from renting to homeowning and taking advantage of the low 3% to 4% interest rates according to the National Association of Realtors.

Not only is this a great time for consumers to buy, it may also be an opportune time for current homeowners to refinance and/or make improvements to their homes, consolidate loans, and tap into the equity they’ve built. 

Migration of city dwellers  
During the pandemic,  New Yorkers have shown interest in moving to Connecticut. With remote work now the norm and many companies instituting work-from-home policies to stay safe, people realize they can work from anywhere. They seek homes with office spaces, as well as second or co-primary homes so they can escape from the city. 

In fact, according to data from the U.S. Postal Service, more than 16,000 New Yorkers switched their addresses to Connecticut between March and June of this year. While it’s been reported that the bulk of new residents settled in Fairfield County, 94 towns in Connecticut actually saw an influx of new residents.

Assuming these low infection rates continue into the fall, Connecticut will remain an attractive place to live, boding well for maintaining the robust level of mortgage activity in the state.  

Tech transformation of the buyer experience
As cities and towns across Connecticut resumed business, so did some of the in-person activities that had been paused during the height of the pandemic. However, virtual property tours, digital applications, e-signatures and drive-by appraisals that had sprung up to limit the exposure from the virus are here to stay. These tools provide a level of digital convenience and time savings that today’s consumers demand. And more advances could be on the way.

Progress and a personalized approach
Adopting tech solutions that simplify processes, shorten wait times and demystify approvals to satisfy a new generation of buyers is key. While there has been tremendous progress with digitizing the front-end mortgage application process, lenders will likely seek ways to transform middle-office operations, which remain largely manual and phone-centric with a mix of paper forms and digital tools. 

Expect to see many lenders looking to explore ways to create and deliver a more seamless end-to-end experience that makes the home-buying process easier and less time consuming for consumers. Whether marshalling their own in-house technology experts or collaborating with third-party vendors, banks and traditional lenders are looking at:  

  • Providing transparent, collaborative portals that give access to all involved in the home-lending process (e.g., borrowers, loan officers, etc.) and a means to communicate with each other, see what documents have been received and which ones are still needed, ask questions, and move the entire process along.
  • Interfacing on behalf of customers, and collecting assets such as bank statements, W-2 forms and income documents.
  • Modernizing underwriting by automatically identifying income and tax information of borrowers and calculating debt-to-income ratios to minimize variability and create consistency.
  • Incorporating virtual closings which leverage docu-sign and allow both lenders and borrowers to close on a property from virtually anywhere.

Indeed, traditional lenders are embracing technology and changing the way business is done. Along with personalized service and expertise in local markets, they will continue to provide complete financial solutions to meet customer needs.

Opinions expressed are those of the author and not Webster Bank N.A. They are not intended as financial or any other professional advice. Consult a professional with regard to your individual situation.

Simon Tahan is director of home loans at Webster Bank. He can be reached at Stahan@WebsterBank.com.

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