The growing market share of nonbanks and alternative financing in the online mortgage lending industry
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Since the 2008 financial crisis, legacy banks have witnessed a decrease in their share of the banking market. The ability of nonbanks to leverage digital technology has allowed them to meet customers' efficiency and convenience demands through online services.
Without having to adhere to the specific regulations that incumbent banks face, nonbanks and alternative lenders have garnered the attention of underserved individuals looking to buy or refinance their homes by reducing interest rates and minimizing down payments.
Nonbank mortgage lenders offer similar services to those of traditional institutions - but with lower down payments and fewer financial criteria. Because nonbanks operate without full banking licenses, they don't have to adhere to as many regulations as legacy banks - resulting in faster loan approvals and more flexible rates.
Most nonbank mortgage lenders offer consumers two major services: home loans and loan refinancing. Home loans can include fixed loans, Federal Housing Administration loans, United States Department of Agriculture loans, jumbo loans, and reverse mortgage loans. Refinancing options offered by nonbank institutions oftentimes include lowering monthly mortgage payments and consolidating debt.There are many alternative lending companies that have garnered success due to the ability to offer underserved users access to mortgage loans through digital channels. These are some of the top mortgage lending services right now:
As consumers continue to demand the speed and convenience of digital technology, various facets of the banking industry will evolve. Nonbanks have already transformed the mortgage lending market, and it's important for top decision makers to stay informed about how banking tech will give rise to even more alternatives to traditional financial services. That's why Business Insider Intelligence is launching Banking, our newest research coverage area to keep you up to date on how nonbanks are garnering success in the mortgage lending market - and the strategies incumbents can employ to adapt.
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