Are digital mortgages the future of home loans?


Australian consumers are becoming increasingly digitally savvy and their desire to go digital, both in their personal and professional dealings, has never been more evident.

The digitisation of financial interactions and transactions is increasingly common and whilst some companies in the financial sector have adapted to this change in consumer behaviour, others are lagging behind.

One example of a financial institution moving towards a more digital model is the Australian Stock Exchange (ASX).

The ASX recently transitioned to a T+2 Settlement cycle for cash equities. The benefits of this move are wide and the change in process will ensure Australia remains at the forefront of global best practice. Increased market efficiency, the creation of capital and margin savings, and faster and more streamlined settlement of transactions for investors are among the benefits which have been made possible. 

The property and mortgage industry

When looking specifically at the Australian property and mortgage industry, many of the same benefits of digitisation apply, as do the consumer trends. In the future, there’s no doubt that buying homes will be as seamless as buying shares online.

There is, however, a long way to go. 

In the current landscape, an increasing number of businesses and stakeholders are utilising e-conveyancing services, a trend that is moving the industry towards a simpler and more efficient system. 

In the face of moves towards digitising property transactions, the question remains as to whether the mortgage industry is going to catch up. 

According to Deloitte’s Australian Mortgage Report 2014 , the $1.3 trillion Australian mortgage market is on the cusp of an exciting change led by a digital and data revolution.

Despite this, mortgage applications – a key part of the property purchase journey – remain one of the most challenging and arduous parts of the process, often involving mountains of paperwork.

This clunky method of applying for a home loan has not gone unnoticed.

Recent research by ING uncovered that millennials would rather visit the dentist than go through the mortgage process. Undoubtedly, streamlining the home loan application process by going digital will increase efficiencies, as well as improve the customer experience.

And with millennials the next in line for a piece of the property pie, keeping this audience happy will be key. 

Another segment of the property industry set to benefit from the digital revolution is mortgage brokers. 

A key sales channel for mortgages, brokers are constantly searching for the most effective way to maintain compliance, streamline application processes and better engage with customers. In a digital environment mortgage brokers will be enabled to to lift their completion rates, allowing them to close more deals and positively impact their bottom line.

But, as with anything in life, there are mixed opinions.

Many in the industry believe that users want an end-to-end digital mortgage experience; however, others argue that face-to-face experience with the broker is still preferable. Some say that mortgage needs are varied and there is no "one size fits all" approach.

Whichever side you’re on, what’s clear is that the consumer wants a faster, more efficient and enjoyable experience.

Be prepared and stay ahead of the curve

Despite it being a hotly debated topic at the recent Australian Mortgage Innovation Summit 2016, the move to digital mortgages will not be an easy or quick process. 

One of the major barriers to e-mortgages could be the fact that there is no nationally accepted mortgage form.

This is being addressed by the Australian Registrars’ National Electronic Conveyancing Council (ARNECC) which is partnering with the Australian Bankers’ Association to put a solution in place. Once this has been cemented, each state and jurisdiction will need to assess and understand how they will implement the form. And this could include extensive regulatory and legislative changes.

It’s no small job, by any means.

On top of this, financial institutions need to adapt with adequate, updated and seamless IT solutions which support this move. 

Equifax has the ability to digitally integrate its capabilities including identity verification, credit and income checks and automated land titles and valuations, saving customers time and effort. These offerings can help lenders and brokers move towards a digital mortgage, leading to faster processing times and a better customer experience, as well as offering real-time access to information. 

Embrace the future

Property and financial organisations across the board are considering what their next move will be when it comes to digitising their business, many of which have made solid progress towards a digital future.

Ultimately, the move to an entirely digital end-to-end property purchase experience is a complex journey, involving a number of various stakeholders.

But what is encouraging is that many of these stakeholders are embracing the move with open arms. 

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