Industry figures suggest speeding up the process
Borrowers are experiencing greater levels of stress because of the time it takes to complete the mortgage finance process, a bank chief has warned.
Richard Harrison (pictured left), head of mortgages at Atom, the UK’s first app-based bank, urged the industry to focus on speeding up the process.
“All too often the process is slow and cumbersome, and it leaves everyone involved in a difficult place,” Harrison told Mortgage Introducer. “The borrower, for example, experiences far greater levels of stress, having to wait for a response to their initial application or for the mortgage to progress, while the broker has to set aside time on a regular basis to chase for updates and get more information on what’s happening.”
He suggested: “There needs to be a much greater focus across the industry on speeding up the mortgage finance process. The mortgage industry as a whole could do far more to improve the speed of the process through the smart integration of technology. It’s something we have worked hard on at Atom bank, to the point that one in five customers now get a response on the same day as their application, and most get an answer within three days.”
Atom, which was the country’s first digital-only bank to be granted a regulatory licence, is keen to make further enhancements to both its existing tech setup, but also to bring in new developments too. “It’s something that I’d love to see the whole sector take more seriously,” shared Harrison.
Casting his eye over the previous year – and looking ahead to the next 12 months, he noted:
“While 2023 was a year of largely rising rates, 2024 will hopefully be a time of mortgage products becoming ever more competitive. Forecasts are already focused on when the base rate will be cut - with some suggesting the latter half of this year - while we have already seen mortgage rates fall below 4.00%.
“Providing we don’t see any more major unforeseen events, which have become commonplace in recent years, this downward pricing from lenders is likely to continue and should encourage more activity in the market.”
He added: “However, just as important as rate will be criteria. With all of the pressure that has been put on household budgets over the last few years, far more borrowers now fall within the ‘near prime’ category. If they are to be able to access the mortgage funding they need, it will require working with lenders who are willing to take a more informed approach, treating them as an individual rather than a credit score.”
Challenges ahead
Harrison believes challenges will persist for the industry in 2024.
“Last year was a tough one for purchase activity, understandably given the impact of rapidly rising rates and the general economic situation,” he reasoned. “While things have improved on that front, the purchase market is likely to remain subdued this year, which presents a real challenge to intermediaries.
“Remortgages are not necessarily going to be a straightforward option either, given the pressures around higher rates and affordability tests, making product transfers an even more important area of focus. It’s crucial for brokers to recognise the importance of this area of the market and develop proactive retention strategies, to ensure that these clients keep coming back over the long term.”
Communication is key, according to Harrison, who attributes Atom’s use of technology to the strength of its relationship with intermediaries.
“It can’t be overstated how important communication is,” he commented. “It’s only by actually understanding what brokers and clients need that lenders can design and develop the products and processes which meet those requirements.
“This is particularly true when it comes to incorporating technology. I know that our relationship with intermediaries has been boosted by the way that we have worked with them in the development of our broker portal, ensuring that it helps them work as quickly and efficiently as possible.”
He stated: “Across 2024 we will be focusing even more on utilising feedback to our product range, so that we can make improvements which could meet the additional needs of borrowers.”
The start of a year can focus minds afresh and Harrison is an advocate for thinking innovatively.
“Just because there is a status quo, a way that things have always been done, that doesn’t mean it’s automatically the right way to go about it,” he offered. “A fresh approach can make a real difference and deliver improvements. It’s also vital to retain the mindset of always putting customers first. By focusing on the client and their needs, you can get your priorities straight and deliver a much better experience.”
It’s a view with which Matthew Cumber (pictured right), managing director at Countrywide Surveying Services, certainly concurs.
“I would say that just because you’ve always done something a certain way in the past, and it has worked, don’t just assume that it will continue to work in the future,” Cumber remarked. “Whichever part of the housing or mortgage chain you are part of, 2024 will be about creating additional value for your customers and your strategic partners. So, be open to new ideas and new concepts.”
Cumber agrees with Harrison, too, about the time it takes to complete a sale.
“We cannot continue to operate in a marketplace where the average sale to completion is four to five months,” he observed. “It’s sheer madness.”
The Countrywide MD favours a contractual obligation to complete on a purchase once an offer has been accepted, to focus everyone in the chain to proceed. “This is obviously never going to happen,” he acknowledged.
Generating confidence
Cumber is “cautiously optimistic” for the year ahead.
“I think it will perform better than many of the less favourable forecasts out there,” he declared. “The main reasoning for this is that interest rates have become far more stable, we are seeing the associated costs of borrowing steadily drop and increased competition is emerging throughout the mortgage market. These are important factors which should help generate additional confidence.”
He is positive too about lenders’ contribution to the industry.
“Generally speaking, I think lenders are too harshly criticised,” Cumber declared. “They have been building relationships with brokers for many years, supporting them through an extensive BDM network, developing their own technology to speed up the process and paying proc fees.
“I’m old enough to remember a market before proc fees and when lenders were solely focused on pushing products through their own branch network. Of course, there is always room for improvement in terms of creating additional value for brokers where possible, be this through simpler to use technology and being able to speak to people rather than automated messages.”
