Increasing rates, mounting pressure and shorter offers create the perfect storm within the mortgage industry. Brokers are shouldering the burden of disappointed customers as banks continue to shy away from commitment.
New data from Moneyfacts shows that the window of availability on mortgage deals is shorter than ever before, averaging just 21 days. Successive base rate rises from the Bank of England have resulted in product rates rising at the fastest pace in the last decade. As a result, brokers have been left scrambling around to lock in rates for their customers, wasting hours tirelessly submitting mortgage applications on systems that are not fit to handle this demand or this crippling time pressure.
We know brokers and firms who are working 60-hour weeks but still generating the same revenue. Time is spent replacing cases and swapping lenders just trying to lock in deals. This is not sustainable.
War, inflation and energy bills are some reasons for this widespread uncertainty. While the banks attempt to predict the future, their efforts hamper the chances of buyers getting on the property ladder. The huge volatility in the money markets means that product ranges are changing almost daily, causing everyone to chase their tails and having a ripple effect of disappointment across everyone in the sales journey.
Affordability is being stretched even further with the rising cost of living, and wages are just not catching up. This, coupled with inflation rates, is creating this volatility. Cost of fixed-rate money has been increasing steadily over the last year, and if you compared affordability just 12 months ago, homeowners can now borrow 20% less.
The pressure is palpable. Mortgage products changing every 21 days, and an average three-hour notice period for product withdrawals from the big six lenders paint a desperate picture.
Unfortunately, along with forward planning, there is an element of beating the clock to secure mortgage rates.
Providing brokers the time to forward plan and inform their customer creates some stability in an extremely unstable market. While most big six lenders pull products in three-hour windows, MPowered Mortgages is currently leveraging its business relationships and working with brokers to give a two-to-three-day window for changing product ranges.
A broker can only lock in rates when a full mortgage application has been submitted. With the average window of three hours for a product withdrawal, and antiquated systems meaning a lengthy and long-drawn-out process, how can brokers even stand a chance of having something to show their clients?
Supporting brokers and creating certainty for their customers is more than just providing ample notice on products. It’s about making the application process simple, streamlined, and automated using AI and data to give everyone stability.
While some brokers can spend 10 minutes obtaining an AIP, MPowered brokers can submit a full mortgage application in that time. There are, in some areas, multiple offers for every property. By providing a mortgage offer to our customers within four hours in some cases, we create certainty for our brokers’ clients and create certainty within the chain. From extended notice periods to concise application and turnaround times, brokers can find some reprieve in these uncertain times.
AI’s power to streamline processes and generate certainty for the broker and customer will only grow in popularity. Other sectors have been keen and fast to adopt new technologies that increase operational efficiencies and improve results; why have we been on the back foot? The only way forward, especially during these times, is to innovate.
The adoption of AI and data-fuelled systems is becoming more commonplace in America. Fast turnaround coupled with simplicity and certainty is becoming the norm in an industry that has traditionally been seen as actively outpricing homebuyers. Automation plays a prominent role across the pond, creating accessibility and stability in the mortgage market. We need to mirror this customer-centric approach within our industry.
The benefits of this will be felt by homebuyers, lenders and brokers – with the latter able to save hours per application. Locking in the best deals is the aim, regardless of what’s happening in the market. Supporting brokers and buyers must be at the forefront of business decisions, which remains absent from many lenders’ practices.
Emma Hollingworth is distribution director at MPowered Mortgages
