Data, robotics and regtech are driving innovation in the mortgage market

A new report also asks whether superannuation could be used as an alternative way to finance property

By Abel Riototar

17 Jul 2018

A group of leading mortgage experts primarily see data, regtech and robotics driving change in the mortgage market and improving customer outcomes in the year to come, according to the Deloitte Australian Mortgage Report.

Where will innovation drive change in the mortgage market in 2018?

During a roundtable discussion, Deloitte’s financial services partner James Hickey wondered why only one of the experts thought ‘new products emerging to address affordability’ would be the key driver of change in 2018.

“Are lenders not seeing product or servicing affordability innovation as a potential in the short to medium term?” he asked the group.

Adrian Buckley, Suncorp’s head of customer product and pricing, said there are “groups doing some interesting things in the affordability space”. Some practice the concept of part-ownership, building houses in affordable areas. A contribution might be made by a trust and then the bank pays the rest of the loan. Over time, the borrower can pay down the loan to bring down their LVR, he said.

Hickey questioned whether the banks are indeed the right provider for such innovation, or if alternative finance sources should be found that might provide a better match to the return/risk profile. He asked if accessing property capital growth instead of interest yield (as per current mortgages) might be of greater interest to investors such as super funds.

“There’s no reason why social and ethically responsible investment can’t also generate a reasonable commercial return if structured properly,” Hickey said.

“Australian residential property as an asset class is significantly underweight by superannuation funds, and while the pathway to entry is challenging, the return/risk profile can be quite beneficial to a balance fund. That seems like a product innovation for the future.”