Rocketing demand for homes in the lead up to the stamp duty holiday deadline – as part of a wider national housing reassessment – led homebuying times to increase dramatically and this created real challenges for many of us across the UK.
Buying chains were put in jeopardy and brokers, mortgage lenders, conveyancers and other service providers had staff working around the clock. The scramble to get cases over the line ahead of the stamp duty holiday and on behalf of clients that just wanted to complete after so many weeks of waiting, all shone a light on the current issues in the process.
Although we’re unlikely to see purchase demand reaching the same levels as in 2021, most now expect the remortgage market to become much busier. With rising interest rates and essential living costs, borrowers are under increased pressure to lock in a competitive mortgage rate. This will fuel an increase in the number of people needing support from the mortgage market.
However, with the remortgage process currently taking around six to eight weeks to complete, and in some cases 10 or 12 weeks following the pandemic, it’s not hard to see why many resent it. Borrowers are often put off by the process and take the path of least resistance – a product transfer – and remain with their existing lender, even if a better product is available from another provider, simply because the process is seen as less cumbersome.
Optimising the remortgage journey
In Australia – the first country in the world to implement a fully digitalised property settlement process – the time it takes to remortgage has fallen from an average of 42 days to an average of 15, and just one day for some applicants. This was achieved by digitally transforming the manual processes currently associated with remortgaging so that it could be streamlined. The legacy process of paper, faxes, wet ink and phone calls was replaced with a simple, online exchange platform that simultaneously completes settlement of funds and lodgement with the land registry.
The process reduces the risk of error and fraud, enables complete transparency for all parties, and delivers a simple, efficient, stress-free process for consumers. Borrowers Down Under now benefit from a single, online system that allows them the transparency to have trust in a process that can often be daunting and stressful.
Homeowners benefit from the approach each and every day, but the true results were clearer than ever in the wake of the pandemic. Much like in the UK, the Australian housing market experienced a significant uptick in demand when its government introduced housing market incentives. Many chose to relocate after reconsidering their housing needs. Unlike in the UK, the jump in demand didn’t cause the market to slow dramatically, with buyers and those remortgaging being able to continue to press ahead with their homeownership ambitions at pace. The digitisation of the process had created enough elasticity for the system to cope comfortably.
The benefits of digitisation
Undoubtedly, the move to create a unified and digitalised process helped create a more resilient market in Australia, but it also stood to bring benefits to customers and businesses.
For mortgage lenders, the adoption of this process has seen significant benefits, such as: increased fund efficiency from faster completion; lower employee costs; and reduced manual errors. Where some providers had previously been handling tens of thousands of customer calls, this reduced drastically. Staff that were previously manning phones and handling exceptions could be deployed in other roles, helping to boost operational capacity.
The reduction in manual errors also helped to eliminate delays, which contributes to improved conversion rates and happier customers overall. These happier customers not only view their mortgage lenders more positively because they have access to a fast and transparent system, but they’re also more engaged with them, choosing to remortgage when the time is right, rather than ignoring their financial options.
In the wake of the pandemic and more recent inflationary pressures (which are fuelling a cost of living crisis), customers are more financially vulnerable and need to feel confident about taking control of their mortgage.
Simplifying this multifaceted process to make it more transparent and efficient will boost customer engagement, prevent consumer financial harm, and bring about real benefits to mortgage lenders, such as operational efficiencies and cost-savings. Those who move first to digital will undoubtedly be the first to see continued success and growth, and more importantly, happy and committed customers.
James Bawa is chief executive of Pexa UK
