Today, getting a mortgage on a property is a cumbersome process. The worst part is that consumers don’t even want to purchase a mortgage – they want to buy a house. The mortgage is, unfortunately, a necessary evil.
Consumers highlighted three key challenges with the mortgage process today
How can Open Finance improve the mortgage process?
Creating simple, consistent product comparisons
Mortgage brokers play an important role when comparing, assessing and applying for mortgage products, but still they hold a disproportionate amount of knowledge and sway.
Digital alternatives are disrupting the market, helping customers to find the right product for them.
In just 15 minutes, Habito can provide a consumer with an overview of suitable mortgage products across the entire market, based on their precise needs.
However, this, and other solutions like it, still rely on the user to enter important information about income and expenditure. An integration with Open Banking data alone would increase the accuracy of the recommendations that these brokers could provide; when the market fully embraces Open Finance they would have an even richer picture still.
Increasing the transparency of the mortgage approval process
Over a third of consumers believe that the biggest challenge when getting a mortgage is the unclear approval process.
This speaks to both a gap in financial education as well as processes which are opaque, convoluted and highly manual.
The former is already being addressed. Mojo Mortgages offers a Mortgage Score product, which allows consumers to get “mortgage ready.” This combination of analysis and advice gives the consumer powerful information, whilst providing them a greater understanding of the end to end mortgage process.
As this evolves into the Mortgage Coach, customers will get important advice, in real time, to help them get mortgage ready.
To address the latter, the industry could work towards a standardised workflow framework which the customer can see, and be notified on, within their preferred digital platform.
Mojo Mortgages has been working with lenders across the market to add status updates to their API messages. This will provide customers with oversight of where their application sits across 18 stages of the process – a keen step in the direction of greater transparency.
Reducing the lead time to secure a mortgage
A mortgage is not a trivial financial product. A consumer is entering into a contract of debt worth tens, if not hundreds of thousands of pounds, for the next 25 years or more.
It makes sense, therefore, that a lender takes time determining whether this is someone that they should be lending to, and that the individual has time to fully appreciate the nature of the product.
However, Open Finance can streamline this process, both improving the experience for customers and reducing organisational cost – whilst still ensuring the needs of both parties are met.
The instant provision of categorised, analysed bank data, across a consumer’s entire financial landscape, can allow mortgage providers to make instant lending decisions with a greater degree of accuracy than previously. Rather than a customer having to dig out and provide months worth of bank statements, they could allow their mortgage provider to see their entire, current financial situation, through a simple mobile consent journey.
Account Score have partnered with Click2Check to provide mortgage brokers with insightful, prequalified customer information, based on bank transaction data.
To go the step further, solutions like this need to be embedded into the end to end mortgage application process. Once the customer provides personal and bank transaction data – ideally in a single click and biometric check – they are seamlessly taken from an affordability assessment, through to product comparisons, all the way to offer.
With the greater availability of data, more thorough, insightful analysis, standardised workflow and product information, and a trusted approach to identity, the market could be entirely disrupted.
“This really slick process of transactions through to a mortgage offer is possible and all the technology exists today for it to be possible, we just need that ecosystem to mature a little bit.”
RICHARD HAYES, CEO OF MOJO MORTGAGES
Read our report “Uncovering the true potential of Open Finance” for more insights and solutions being developed across the industry today!
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