What the Future Holds for the Mortgage Application Process

Applying for a mortgage is a process that encompasses numerous steps, and whether you’re considering getting your foot on the property ladder or you’re already on it, it’s always an overwhelming task. But as technology evolves and systems change, the application process also shifts. 

This article looks at what the mortgage industry has in store when it comes to applying for a mortgage. 

Automated data sources

The use of automated data sources will continue to grow, and the result will be far less manual data entry, from both customers and mortgage brokers, and an increase in the quality and breadth of data we have access to. It can help to foster automated decisions and helps mortgage lenders fill in the gaps where traditional sources fall short. 

Automation has begun to impact everything from verifying identities to assessing creditworthiness and it can mine information from social media, publicly accessible databases and bank records to help businesses make better-informed decisions. 

Automated data sources span several mortgage application processes, including underwriting, accounting and regulatory reporting, to name just a few, and it can help to accelerate loan assessments. 

Rise of digital signature use

The use of e-signatures has been expedited as a result of mortgage lenders striving to become paperless, and to speed up the often long, drawn-out conveyancing process. 

This has been particularly effective in helping clients who are buying property in locations further afield from where they currently live, enabling lenders and conveyancers to move the process along far quicker, without the risk of signed documents going missing or getting lost. 

Digital client onboarding from remote businesses

With many online mortgage brokers specialising in specific niches and helping clients with irregular income or unusual backgrounds, from those with bad credit to self-employed individuals, the market has become more streamlined to reach people from all over the UK that have more individual demands. 

Digital onboarding has helped mortgage brokers become more accessible and, in the future, these tools will become more commonplace. Online Mortgage Advisor is one example of a company that utilises an interactive tool that matches customers with a specialist broker based on a series of questions.

Others use chat interfaces and automated chatbots as a way for brokers and lenders to communicate with interested parties and deliver a better customer experience during busier periods or to pre-qualify customers. 

Similarly, virtual interviews and meetings make the process of communication easier and more convenient for both clients and brokers. 

Open banking

As the availability of mortgage services continues to grow, Open Banking covers a broader area, now including decision-making, borrowing and payments. While adoption has been slow to get going, it’s expected that the adoption of open banking will increase steadily. 

Open Banking is expected to be particularly helpful where mortgage affordability checks are concerned, enabling brokers to pre-qualify customers – with affordability one of the primary hurdles customers face when applying for a mortgage, this could be immensely powerful, particularly for those applying for a mortgage for the first time. 

A future with mortgage passports?

With ID verification tools on the rise, it’s believed that a form of ‘mortgage passport’ could well be in the industry’s future to help buyers skip the process of re-applying for a mortgage when buying another property. 

For those who buy regularly, such as investors and developers, or people buying property intended as a buy-to-let, a passport designed to speed up the process of applying for a mortgage could be a widely adopted tool that would make conveyancing far easier and quicker. 

Increased competition from fintechs

The number of fintechs and neobanks disrupting the industry has increased over the past few years, and in the future, they are likely to take up even more space in the sector. Such competition is great news for consumers and while recent interest rates have risen, with the potential for more on the horizon, the competition has meant that rates have been kept relatively low to protect business’ expectations.  

Fintechs and neobanks don’t necessarily have the financial backing or customer base to overthrow traditional banking immediately, but they do have the ability to launch features far quicker and that could increase their popularity with customers in the future. They are also driving segmentation in this industry and this makes them powerful when it comes to delivering exceptional customer experiences. 

Blockchain efficiency

Blockchain is something that we’ve heard more and more about in recent years, but it has the potential to really shake up the mortgage industry, especially where applications are concerned. Blockchain sequences can be created to make property ownership more accessible to people, especially first-time buyers, relieving some of the complexities that the process brings with it due to legacy inefficiencies. 

By leveraging blockchain at different stages of the application process, relevant parties can guarantee up to date, accurate information with the inherent security that blockchain provides. It reduces fraud risk, makes it virtually impossible for transactions to be altered and enables contracts to be triggered automatically when the criteria are met, resulting in a frictionless process for all. 

Final thoughts

There’s no denying that, while it has changed considerably compared to just a few years ago, the mortgage industry is still with its challenges. The application process is notoriously long and complex, but tech has the potential to remove some of those barriers and speed up the application process, for both the client and professional parties. 

From digital onboarding and communication tools that make it easier for lenders and brokers to reach a broader group of people, to blockchain, fintech and automation tools, the mortgage industry is bringing itself up to date and has the potential to look completely different to how we currently know it if more companies choose to adopt these ways of working.