Why technology could be here to stay for the mortgage market
The last few weeks have seen considerable change for the mortgage market. Lenders, advisers and other stakeholders in the market have all faced the challenge of adapting to working at home, having to further embrace technology in order to keep the market moving.
Craig Hall (above left), head of broker relationships & propositions and Danny Belton (above right), head of lender relationships at Legal & General Mortgage Club offer their thoughts on the implications of COVID-19 for mortgage lenders and advisers, and the technology that could be here to stay once the crisis ends.
Hall said: “Even with the housing market on hold, there are still plenty of opportunities for advisers to help their clients.
“Recent data from conveyancing firm LMS has shown a weekly rise of 9% in instruction volumes and thousands of borrowers will be coming to the end of their mortgage terms over the coming months.
“These customers will still need to find a new fixed rate to lock into for the future, providing new prospects for advisers to help borrowers navigate through the mortgage market.
“For advisers, a good grasp of integrating technology into their businesses will help them to make the most of these opportunities now, and what the market post-COVID-19 could present.
“This is a brave, new digital world but one in which face-to-face advice remains absolutely vital.
“Fortunately, as we all adapt to this new normal, advisers are able to draw on tools like Skype, Zoom and FaceTime to keep in touch with their clients and continue to deliver important advice in a personable way.
“Advisers are using CRM systems to keep on top of the levels of communication with clients and we’re even seeing a greater use of social media to keep their clients updated on market movements or provide financial tips and guides during the lockdown.
“At the same time, advisers have the information they need to support their clients during these uncertain times at their fingertips.
“At Legal & General, we recently launched our COVID-19 FAQ page which provides advisers with the latest information from around 90 lenders on changes to their applications. The site has already clocked more than 2,500 unique visits.
“All this is helping advisers to build and develop great relationships with their clients to help them now or to get them in the best possible shape to press ahead with their housing plans in the future.
“And in some instances, consumers really are still pressing ahead with their plans. Estate agents and developers are operating virtual tours of homes and a number of developers are still reporting new reservations.
“The transformation to digital amongst lenders, customers and the wider mortgage market we have seen over the last few weeks is unlikely to change, even after the crisis.
“However, borrowers will always appreciate the friendly reassuring face of an adviser, and by embracing technology now advisers can ensure they are well placed to meet any pent-up demand once the stay at home restrictions are lifted.
“However, the task of ensuring we continue to have a strong, vibrant advice market doesn’t just sit with advisers themselves. These are challenging times and as an industry we need to come together to support the great work advisers do in helping their clients to find the right mortgage for them.
“Without the prospect of a bustling purchase market in the near-term, much of the work that advisers will undertake over the coming months will be focused on product transfers.
“If lenders whose product transfer fees are not currently at acquisition levels were to increase them, at least temporarily, these would support advisers across the country and help our advice market to emerge even stronger after the crisis.
Belton added: “Despite the upheaval caused by COVID-19 and the subsequent lockdown, the mortgage market is now adapting to the new normal.
“Before the crisis, the pace of digitalisation in the sector was more of an evolution, but the impact of the lockdown has now led to something of a transformation as many lenders embrace technology across their businesses.
“While there is more work to be done, the pace of change has been quite remarkable.
“In just a few short weeks, the market quickly moved to equip their workforces to operate from home. Lenders have implemented new technology and telephony systems to enable many of their employees to continue as close to business as usual as possible, all while facing the operational challenges of handling thousands of inbound enquiries on payment holidays.
“COVID-19 has clearly brought a cultural shift in the way companies view their employees working from home and I expect that even once the crisis is over, we will continue to see lenders adopt practices where portions of their workforce continue to operate more regularly from their sofas and kitchens, rather than the office floor.
“Perhaps the biggest transformation we are seeing now is around valuations.
“The remortgage market remains open but with physical valuations not currently possible, more lenders are looking to implement digital alternatives.
“COVID-19 has turned what was a much slower move to integrate digital valuations into a transformation as lenders switch to automated valuation models (AVMs) or desktop valuations which crucially don’t require the valuer to visit physically visit the property.
“Again, the likelihood here is that lenders will resort to these digital solutions for a considerable portion of their cases long after the virus has passed. Once the initial cost of onboarding these technologies is absorbed, they will offer a much more cost-effective means of guiding lending decisions.
“However, there remain hurdles for the mortgage market to overcome amidst the current lockdown and potentially in the post-COVID-19 world.
“With workforces and customers housebound, the crisis has posed challenges around identity and verification checks for businesses across the housing market, including lenders.
“The reliance on manual processes to verify customer identity in accordance with anti-money laundering laws is now much more difficult.
“Instead, lenders are turning to digital ID verification tools and it’s likely we will see a significant uptick in digital ID&V long after the crisis, as the industry and consumers realise its convenience.
“In fact, the current situation may even pose an opportunity for the sector to embrace technology so far as to make the mortgage industry a truly paperless sector.
“Ensuring a healthy advice market will also be vital to lenders too. While Lenders are already facing the challenges of managing payment holidays and planning a much-needed return to high LTV lending, as an industry we still need to look at the different ways the market can support advisers and help them to emerge in a strong position after this crisis.
“This could include increasing procuration fees on product transfers now, which will make up most of the business advisers undertake in the months ahead.”