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How Fintech Lenders Give Mortgage Borrowers an Edge

In 2010, these lenders originated just $34 billion in mortgages, representing 2% of the market. For refinances, theyre nearly 15 days faster than more traditional lenders. Moreover, the researchers found that tech-based lenders lower their denial rates when theres a higher volume of applications. In parts of the country where fintech lenders have a greater presence, existing borrowers are more likely to refinance. The default rate on Federal Housing Administration loans originated by fintech lenders is roughly 25% lower than traditional ones. How online lenders could improve outcomes for mortgage applicants in the future Fintech lenders are far from the only ones who are investing in online platforms and working to digitize the mortgage process. Consequently, the researchers predicted that fintech lenders’ success will predicate more advancement in this space. “Technology will allow the origination process to be faster and to more easily accommodate changes in interest rates, leading to greater transmission of monetary policy to households via the mortgage market,” the researchers wrote. “Our findings also imply that technological diffusion may reduce inefficiencies in refinancing decisions, with significant benefits to U.S. households.” But the extent to which consumers benefit from technological change in the mortgage industry might depend on the regulations lenders are subject to. However, a recent study from researchers at the University of California, Berkeley, indicated that while fintech lenders still are more likely to deny loans to black and Hispanic consumers, they also tend to have lower denial rates relative to traditional lenders.