Mortgage Boom Proves Technology’s a Bust

Celent predicts almost half of the top 100 US mortgage lenders will deploy new loan origination technologies by the end of 2005.

In a new report entitled “Mortgage Technologies: Paving a Path to Full Automation,” Celent analyzes the effects of low interest rates on the mortgage industry and the obvious need for next generation solutions offering greater efficiency, higher levels of integration, and the promise of full business process automation.

Today�s low interest rates have not only meant a rise in mortgage volumes, but also an increase in processing backlogs and customer complaints by nearly 15%.
“It�s been a real eye opener for an industry already plagued by time-consuming, paper- and labor-intensive processes, front-end systems that do not communicate efficiently with back-end technologies, and third parties that are often not integrated into the process electronically,” said
Christine Barry, banking analyst at Celent and author of the report. “If ever a sector within the financial services industry were in great need of technology and automation, it would be the mortgage industry.”

Though many lenders are dissatisfied with their current systems, it will not be until the inevitable interest rate rise by the end of this year and subsequent volume drop, that lenders will have the time to invest in new technologies imperative to sustaining current margins. Celent forecasts spending will increase at a compound annual growth rate of 66% by the end of 2005.

“Advances in automation are moving vendors and lenders closer to where they want to be,” adds Barry “but the truly paperless mortgage is still a distant vision.”

A Table of Contents is available online.

For more information about Celent and their products and services, visit