Non-Bank & Alternative Lending Competition With Traditional Mortgage Lenders

As today’s real estate consumers navigate the home buying process, they’re looking for the best outcome and experience, which non-banks like Zillow, Quicken Loans, and loanDepot are providing through online services. In fact, over 40% of customers believe non-banks are a better lending option than traditional banks. While many consumers are still requesting mortgages through traditional avenues, major banks, and credit unions must be prepared to navigate the drastic changes in consumers' approach to the home buying process. 

Alternative Lending Industry Landscape 

Companies like Zillow receive 130-150 million visits per month. That's more website visitors than the top three US mortgage lenders combined. While top US mortgage lenders such as American Mortgage & Equity Inc. get thousands of visitors to their page, 100% of their audience for reviewing loan alternatives overlap with Zillow, Trulia, Redfin, and Realtor.com. According to NestReady’s analysis, 58% of top US-based mortgage lenders face medium to high-risk levels of website audience loss to these platforms. As of 2019, Zillow became both a real estate platform with listings and a mortgage lender, making it a strong threat to traditional US-based mortgage lending institutions. Keeping this in mind, NestReady can provide an Audience Overlap Report for free to mortgage lenders and financial institutions.

Non-Banks Modernizing the Home Buying Journey

As homebuyer demand for a tech-enabled mortgage process grows, traditional mortgage lenders and credit unions at risk of losing potential loan requests to non-banks. In addition, since nontraditional banks like QuickenLoans do not need to operate with banking licenses, they can often provide loans faster and at more flexible rates than traditional banks. This, coupled with non-banks' ability to reduce loan processing time and reduced interest rates, can make it more difficult for traditional banking institutions to compete for loan requests. Furthermore, Millennials, who account for 36% of homebuyers in the market, are requesting services like real-time approval and paperless document sharing, which rely on modern systems and technology. These potential mortgage clients are turning away from the traditional mortgage lending system, and opting instead for automated loan-decision algorithms, electronic document gathering, and secure online communications.

With that in mind, alternative mortgage lenders now account for about 45% of all home loans—the largest share in 20 years, according to the U.S. Federal Reserve. This fierce competition requires traditional banks and credit unions to change their approach to potential clients by creating a more consumer-centric loan origination process that offers a one-stop-shop home buying journey.

NestReady bridges the gaps between consumers, banks, and real estate professionals, enabling financial institutions to offer a personalized and seamless home search process. With NestReady, lenders can enhance their marketing, increase engagement and client loyalty, and achieve higher and faster conversions — all through their own digital environment. If this sounds interesting - we invite you to reach out to our team here. You can also follow us on Twitter or LinkedIn for product updates, industry news and more.

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