Guest blog by Nick Chadbourne, CEO, LMS
Over the last two years the mortgage industry has witnessed how a technology driven approach can help transform the mortgage journey, making it speedier and more efficient for all. Yet, as life starts to return to normal following the pandemic and the need to work remotely eases, it’s important that as an industry we do not lose sight of our fintech ambitions and continue to harness the benefits that technology can bring.
During the coming year, we are expecting to see a surge in remortgage activity as a large swathe of borrowers who took out two and five-year fixed rates start to see their deals expire. UK Finance is predicting homeowner remortgage activity will leap from £62bn in 2021 to £93bn in 2023 and it's vital that the industry prepares to ensure efficiency. To do so, we need to make sure that the right tech is in place to help consolidate the data the lender has to hand and make it easier to evaluate.
All borrowers are different. That’s why there are such varied criteria for lending, but by that same logic it follows that some customers present very straight forward cases that need less manual intervention, and some are more complex. As such, remortgage conveyancing should not follow a one size fits all approach. Each case should be individually assessed according to the data on hand and then either fully automated via a digital remortgage proposition or handled manually for those that need the valuable expertise of the lender or conveyancer.
It would also be hugely helpful for lenders and law firms who can benefit from a much more efficient and seamless process, as well as being able to set much more accurate expectations to all stakeholders when it comes to timelines for completion. All of this will only help deal with such high levels of activity currently being seen in the market. This tech exists now, we just need to put it to work.
The latest LMS Remortgage Healthcheck Index shows that, in Q4 2021, only 46% of LMS borrowers chose to increase the size of their loan, with 22% reducing it. If their circumstances allow, such borrowers could potentially be candidates for an automated service.
Digitalising the process from the onset can help distinguish between which cases can be automated and which might be more complex, freeing up time for lenders to focus time and resources on the cases that need more input. A fully automated remortgage can pull in all a borrower’s existing data connected to multiple data sources via the Application Programming Interface (API), with borrowers only needing to confirm accuracy along the way.
Digital ID verification, automatic bank account checks and the digital sharing of documents will not only be more efficient and speedier, but will also limit the opportunities for fraudsters to intercept or forge documentation as well as prevent the end customer from having to provide the same data all over again to a different lender.
As we move further into the digital age, having such processes in place will no longer be seen as innovative for our industry but an expectation from borrowers who have come to expect much more streamlined services in all walks of life.
With each firm in the mortgage chain at a different stage in their own digital journey, a complete link up is yet to happen and translate into a streamlined automated approach from start to finish. A modern, digitalised process is easy to adopt – which makes the case for implementing one even more compelling. What is needed most is cross-industry collaboration between all parties.
This year is already proving to be a busy one for lenders, but through the launch of the first digital remortgage, we are confident some of this pressure can be eased.
References: UKF Mortgage Market Forecasts 13 December 2021.xlsx (ukfinance.org.uk)
For more information: corporate.lms.com/
The views, opinions and positions expressed within guest blogs are those of the authors and do not necessarily represent those of the BSA.