31 January 2023

How important is technology to the mortgage industry in 2023?

By Emma Hollingworth, Managing Director of Mortgages at MPowered Mortgages

Historically, the mortgage industry has been driven by lender needs and has not often been considered user centric. Previously deemed as slow to adapt, the mortgage industry was compelled to change when, almost three years ago, the pandemic forced a traditionally paper-based industry to go digital. Since then, the use of technology within the industry has developed, constantly becoming more sophisticated until we reach what we’re experiencing today; advanced technologies such as artificial intelligence (AI) being integrated into the mortgage journey to improve and modernise the process for everyone involved.

Technology in the mortgage industry - who does it benefit and how?

Harnessing the power of AI and machine learning, we are now able to automate large portions of the mortgage application process. At MPowered Mortgages, we’ve reimagined the entire mortgage process, using revolutionary technology to facilitate simpler user journeys, instant document verification, and affordability models built on data. Ultimately, technology delivers faster transactions and better operational efficiencies. 

Implementing this technology, permits the whole mortgage chain (advisers, lenders, buyers, conveyancers, underwriters) to work more collaboratively. This level of integration will serve to provide homebuyers with the security and the speed they are looking for when making, what is for most, one of the biggest financial decisions of their lives.

In a business traditionally characterised with, paperwork, delays, stress, and uncertainty, we’re now able to provide brokers with quicker, more certain options. We knew that the system needed to speak to the broker along the journey, so we facilitated this by adding real-time underwriting and other dynamic features across our platform. In turn, this allows brokers to spend more time responding to market updates, giving advice to their clients, and securing further business. The role of technology here is not to replace people, but to allow them the time to focus on carrying out the tasks that only they can do.

Many of us are aware that consumers are frequently put off from getting a mortgage or switching providers because of the lengthy and stressful process. By improving the mortgage process, and by providing stability and certainty to those buying or remortgaging a home, we can improve the over confidence that consumers have in the home-buying process.

Relevance in 2023

Even before the pandemic, an economic shift towards digitisation could be identified, and although embracing technology within the industry took some getting used to, evidence suggests it is here to stay.

Digital technologies offering speed and certainty are no longer a luxury in this economic climate; the mortgage process now process demands efficiency. We are living in a ‘buy now, consumer now’ society. Results from our first House Pace index suggest that in 2022, 31% of properties received an offer within an hour of viewing. This is a 24% rise on figures produced in 2018.

And during 2022, mortgage rates changed almost daily, so it came as no surprise to see buyers acting in unpresented ways to secure property quickly, in the hope of avoiding increased interest rates. However, even in a market that is slightly more stable, the desire for property is still outweighing the stock available, and so the window of availability to secure a mortgage offer is very small.
Without fresh, updated systems, and the efficiency AI can bring, brokers are simply unable to keep up with buyers demands, meaning around 50% of offers are falling through. By integrating AI into the process, we can offer consumers further transparency and faster decisions, ultimately leading to smoother customer journeys and better results.

The recent Consumer Duty publication is a reminder to all firms that we must be focussed on our customers, and technology is, unquestionably, fundamental to delivering the best customer outcomes. The ability to provide fast decisions creates stability and certainty at a volatile time for many.

The addition of AI and machine learning have already brought about huge improvements to the mortgage process, and fortunately, with AI, the development is constant, with no limit to optimisation. The advancements we are seeing in technology are crucial to our sector.
Across the pond in America, AI and data-fuelled systems are becoming more conventional, establishing stability in the U.S. mortgage market. Clearly, the way forward is to innovate, with the goal being to have in place real- time decisioning driving the process at every stage. Speed and certainty is what this industry needs until the supply and demand for property are matched; that is what technology can provide.

For adviser use only. Please note this content has been supplied by our lender partner and as such, is their responsibility. No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the information in this article.