Lisa Martin (LM): The Covid-19 crisis has accelerated the development and implementation of technology in the mortgage market. Which digital tools will be most beneficial to buy-to-let lenders both during the rest of the crisis and once the market returns to normal?

Angus Stewart (AS): As with many industries Covid-19 has exposed the weaknesses but also the opportunities inherent in many sectors.

In the mortgage industry having so many professionals being forced to work from home, especially those involved in the surveying and valuation process, brought about a dramatic contraction in mortgage choice for consumers.

Those lenders still able to operate made significant changes to their lending criteria and their product set.  And they did so more than once as they sought to use price and lending criteria to manage demand to a level their pared down workforces could cope with.

In the buy-to-let market traditional intermediaries pre-Covid were already struggling to cope with ballooning lending criteria due to years of regulatory change.

To deal also with the rapid price and product change in real time brought about by Covid-19 proved pretty much impossible.

It may well be that some intermediaries feel they have reached the tipping point that encourages them to look for partners that can take away some of the pain of dealing with the buy-to-let market in particular.

It was certainly a time we felt our investment in a technology platform that brings together in one place lending criteria, affordability calculations and product pricing across the entire buy-to-let market had paid off.

In fact, we are now looking as to how we can take our offering to those same intermediaries.

LM: What do technology providers need to take into account when it comes to developing platforms for advisers serving the buy-to-let market? What are the biggest issues facing advisers in this area?

AS: The private rented market that we serve is undergoing a transformation as landlords adapt to a range of regulatory and taxation changes.

The market is becoming increasingly professionalised and the number of landlords with a portfolio of properties being run as a business is on the rise.

Their requirements are more complex than the traditional landlord with just one or two properties.  There is a dynamic and competitive buy-to-let mortgage market for these customers with about 100 different lenders all of whom have different criteria and affordability rules which an adviser needs to consider when identifying the best deal for their customer.

Together these two developments have provided a very challenging situation for intermediaries.  Technology providers need to bring all these parties together in seamless way.

To do this effectively requires access to the necessary databases so that real time enquiries can be made of which products might be available for a customer’s given situation which can then be matched for affordability for that individual and for their property portfolio.

The aims should be one search covering affordability, product type and price.

LM: Looking ahead to the next 12 months, what do technology providers and developers need to be doing more of in your view?

AS: Technology providers need to build closer relationships with lenders and intermediaries to facilitate a more streamlined application process to better meet the needs of the customer.

The whole mortgage process is antiquated in the way it operates and anything that can be achieved by improving the process through technology and the better linking of brokers, lenders, conveyancers, surveyors and valuers and the Land Registry with the goal of reducing cost and timescales on behalf of the customer must be a sensible approach for all parties to adopt.

It is very hard for customers to understand why it might take anything up to six weeks to get a mortgage offer.

The widespread adoption of Open Banking by lenders should make a huge difference.  Open Banking which provides for the confirmation of bank statements, showing income from lettings and potentially other earnings should facilitate the delivery of an instant decision in principle.

Linkages to credit reference sites and databases of property valuations will further help automate the lending process so in theory a full mortgage application could be initiated, underwritten and the offer confirmed within hours.

LM: What do you think the next big development will be in tech for the buy-to-let market?

AS: Landlords eager to reduce their costs in the face of rising taxation and regulation will demand a more technologically advanced solution to their need for finance.

I can foresee a time when data about individual landlord’s portfolios together with their credit history is packaged in such a way by companies such as us that individual lenders will bid for mortgage business, potentially pushing lenders into the position of being a commodity item.

A given landlord customer may have differing offers for his business from different lenders at different prices – in essence a reverse auction.  The potential is there to give the customer greater control over the mortgage process.

LM: What would be your advice to buy-to-let lenders looking to improve their digital offering?

AS: Digitisation provides the capability to move towards much more bespoke pricing for a customer.

If we can get to this point it would allow lenders to balance their portfolio more effectively, optimise their returns and pick the customers they wish to have to match their risk appetite at a given time.

This may be five or more years or so away, but we would then have a marketplace for mortgages fundamentally different to today.

Current players will need to make better use of technology and lenders will need to adopt a new stance or face becoming marginalised.

There is the prospect of a two-speed market: those who have the technology to enable them to cherry pick the business they want to write and those without that flexibility.