LENDING: MORTGAGES
Bricks and clicks Everybody agrees that the home-buying experience can be improved upon. But, as HSBC’s Christopher Pearson will tell you, it’s ‘not something you can just throw a bunch of algorithms at and think that’s going to land nicely with the customers’. Here, the Head of Intermediary Mortgages at HSBC shares thoughts on reform with Trussle’s Tom Hodgson and Laurean Herepean of FintechOS 2021 saw mortgage approval rates reach their highest level in 13 years in the UK, even as the biggest annual percentage increase in property prices since 2004 pushed the cost-to-income ratio for housebuyers to a new record. That said, with Bank of England interest rates hovering above zero, mortgage payments were historically low – although that wasn’t much comfort for first-time buyers, struggling to find some of the heftiest-ever deposits as they watched the home of their dreams spiral in value. As the New Year fireworks fizzled, the property market continued to sizzle. In some areas of the country in January, agents were shifting much of their portfolio within hours. It wasn’t even worth viewing, unless you had the money – or, at the very least, the offer of a mortgage in principle – in your hand. And all that has made the lending market fiercely competitive, and given innovative businesses – both legacy lenders and digital startups – an enormous incentive to find new and faster ways of bringing mortgages to borrowers. According to research conducted across 22 countries, including the UK, for the annual European Retail Banking Radar, the public is rapidly becoming accustomed to the digital property-buying experience, too. Back in February 2020, 50 per cent preferred to consult with a branch bank advisor when signing a mortgage contract, while only 29 per cent would submit a digital mortgage application. By March 2021, that had changed markedly: 52 per cent were now happy to research their mortgage online and 47 per cent to apply for one through a bank portal.
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TheFintechMagazine | Issue 23
In the UK, a new wave of digital lenders and intermediaries are responding to these massive shifts in the £1.6trillion property market – but not only challengers. Major institutions, whose share of the market had collapsed to around half by 2018, are seizing the opportunity presented by recent events and leveraging technology to make the most of them. The 60/40 market split between institutional and alternative lending channels in 2020 led UK Finance to observe that the mortgage market is more diverse and competitive than ever. That’s got to be good news for homebuyers. But what is it they really want? For Tom Hodgson, commercial director for online mortgage broker Trussle, which was among the early cohort of mortgage challengers to emerge in 2015, improved speed of service is a big part of the mix. “A customer wants to know ‘can I buy this house? How quickly can I buy this house? Is there anything that’s going to stop me buying this house?’ and the more that we can do to reduce that timeframe – bring speed and certainty earlier in the journey – the better,” he says. “That’s the direction we’ll need to keep going in, to really nail this customer experience point.” In fact, Trussle stakes its reputation on it – and, given how fast the market is currently moving, that’s probably a good strategy. It promises to deliver a mortgage decision in five days and is so confident of its technology and processes that it backs that up with a £100 reimbursement should it miss the deadline. The company was a runner-up in the country’s best mortgage brokers in the What Mortgage awards in 2021. Arranging a mortgage is a complex task and knowing how best to expedite that
process comes from understanding the choke-points in the existing procedure, says Hodgson. “It was really interesting to see a heavy reliance on automated valuation models, for instance, during the pandemic period. It meant cases were starting to progress quicker through to offer, even when there were obvious ffnews.com
