Web lending’s next five years Originations, investment in sector will grow,
firm says
Wednesday, October 25, 2000 Inman News Features

Five years into the online lending business, few consumers are actually
getting their loans online. But a new study suggests that will finally change in the next five years. Global Mortgage, a new research division of consulting
firm TowerGroup suggests Internet mortgage originations will account for 1.4 percent of an estimated $1 trillion in residential mortgage volume this year, but will bump up to about 10.2 percent by 2005. This year, lenders in the U.S. will spend about $249 million on Internet-related mortgage technology, the firm found, an investment that should double by 2005, TowerGroup found. About half of all U.S. consumers shop for mortgages online, yet few apply, the firm said. That gap will continue in the years ahead, as 70 percent of consumers will express a willingness to apply online by 2005 but only a fraction doing so, the firm said. "The mortgage process remains a cumbersome and often daunting one for consumers," said Richard Beidl, Global Mortgage director. "To meet consumer needs and expectations, mortgage lenders will need to strive for the right blend of high-tech and high-touch integrated across all delivery
channels-from bank branch and call centers, to branded Web sites and remote loan officers," Beidl said.


ON-LINE DISCOUNT MTG. BROKERS are Internet mortgage brokers that are attracting an increasing number of the new borrowers because their fees are discounted as much as 50% over non-internet brokers. These ON-LINE DISCOUNT MTG. BROKERS are copying the compelling trend of DISCOUNT STOCK BROKERS who are using the Internet to capture more and more of the stock brokerage business. These ON-LINE DISCOUNT MTG. BROKERS are multiplying their profits by expanding to states with no physical office requirement through our ADD-A-STATE@MORTGAGE LICENSE MALL services and closing through title companies.

Dallas Morning News Article- Monday, January 25, 1999

by Psyche Pascual, Knight Ridder Newspapers


A recent study by San Jose, CA-basedMyers Internet Services, conducted for Mortgage Banking magazine, found that both mortgage professionals and consumers are increasingly turning to the Internet for their mortgage needs. The following are some key highlights from the survey: (1) Most polled felt that the Internet was geared more tooward refinancing rather that the purchase of mortgages. (2) Of those polled, 73% feel that the Internet plays a strong role in their business strategy (3) 64% of the respondents would fill out a mortgage application online, but the remaining 36% felt the traditional offline process was better because of the direct human contact.

 People who shop on the World Wide Web like the speed and the no stress way they can buy things at any and all hours of the day. Consumers are becoming increasingly aware they can save hundreds of dollars in fees simply by using the Internet and doing their own homework. For example, Forrester Research, Inc., a Cambridge, Mass.-based technology research firm, estimated last year that the online mortgage industry would generate $752,000,000 in loans in 1998, analyst James Punishill said. Palo Alto, Calif.-based E-Loan will do more than $1,000,000,000 in loans this year, he said. Shopping for a home loan has flourished on the Internet for much the same reasons that online stock trading has. Consumers like to conduct financial business at their leisure, Mr. Punishill said. But the fastest-growing group on the Internet today is online brokers who are lenders themselves. By financing their own loans, as well as processing applications for 59 other lenders, online lenders such as E-Loan reduce fees by cutting out the middlemen at banks and brokerage houses.
To lure customers, online lenders have also streamlined the financial paperwork. Almost all the Web sites have loan applications that can be filled out in less than a half-hour. Their Web sites also typically offer credit evaluation tools, mortgage calculators and other educational tools about interest rates and affordability. Consumers who don't have time during the day to visit loan brokers can take advantage of 24-hour access to interest rates and evening loan counseling. "What's been easiest to move onto the Web are people with perfect credit," said Mr. Punishill, the analyst with Forrester Research. In 1999, however, "we're going to see the nature of the game change here." Companies are also starting to offer more rebates and discounts to attract frugal borrowers. Most of the online mortgage companies in a recent survey reported charging less than half the fees, or points, charged by conventional lenders to shop the loan around to different lenders. If a traditional mortgage broker charges $2,000 to find a loan for a $200,000 house, for example, the online mortgage companies would charge about $1,000. Even some discount brokers who use lender rebates to attract borrowers said they couldn't come close to those savings.
 (4) Only 2% of the respondents felt that a company's brand name was important in the decision making process, while 59% of the consumers chose a mortgage company based upon rate. (5) Of the consumers polled, 88% felt that multi-lender sitees will flourish on the Internet, 61% of the mortgage companies surveyed agreed. (6) 65% of the sites on the Internet post current rates, an increase of 21% over last year's findings