The Fed lowered interest rates recently for a third consecutive time and the second time in two months. The move signaled easing financial conditions that are likely to trigger a surge in the demand for mortgages across the country — particularly in regions where there have already been signs of a housing rebound.
But the higher volume will also undoubtedly present a challenge to financial institutions, if they are bound by legacy technology. Too much of the mortgage technology still used by many banks and other lending institutions isn’t designed to keep up with increased demand. Nor are these outmoded systems able to improve profit margins for lenders. A recent Freddie Mac study indicated that as recently as this summer, mortgages still regularly cost, on average, more than $11,500 for a lender to originate.
