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How COVID-19 could digitalise the house buying process

Miles Robinson, head of mortgages at online mortgage broker, Trussle

We’re living through an extraordinary health and economic crisis. We’ve not experienced anything quite like this in our modern day. The coronavirus outbreak has caused disruption across the economy, and we’re now feeling the impact in the mortgage market too.

As the situation continues to escalate, it’s clear that the industry wasn’t prepared to handle the impact of COVID-19. The situation we face in the mortgage market is hindered by an archaic mortgage process that’s in serious need of digitisation from end-to-end. The crisis has highlighted that now, more than ever, many are relying on technology to complete basic tasks.

The current, and rather sudden, lockdown has resulted in an end to physical valuations, and as a consequence, customers are being turned away as many lenders can no longer accept applications from borrowers with high LTVs. The buyers market has gone into shutdown as people are no longer allowed out to view houses, lenders are withdrawing their products, and the number of mortgage applications that lenders are able to deal with each day has been reduced. There’s been a jump in demand from customers requiring more support, yet many of the more traditional lenders are unable to work remotely and lots of the call centres and back offices in India are shut due to the lockdown – causing delays across the board. This situation is a wakeup call for the property market.

It’s clear that the offline stage in the lending process is where the most friction is occurring – and automation is needed to better help people achieve their home ownership dreams. Lenders that rely on physical valuations across all of their mortgage products are being impacted as these valuation surveys can no longer take place. As a result, lenders are often unable to approve new customers and can only take them as far as the valuation stage in the process.

Those lenders who have already adopted desktop valuation technology or automated valuation models (AVM) are better placed to continue processing customers remotely. It’s not clear how long social distancing rules will be in force, so businesses need to adopt technology to help them continue to work throughout the crisis.

As we start to see more automation as a result of the lockdown, there may also be a change in the documentation process of transactions. Lenders who require physical copies of documentation or signatures will experience issues during the lockdown. As the pandemic continues and technological advances continue to evolve and adapt to consumer needs, e-document processes and e-signatures might become the norm after the virus passes.

COVID-19 has shown that online services are more important than ever. The virus is a catalyst that could accelerate the digitisation of the industry. With more automation across the industry, we’ll be better prepared to work more cohesively and continue helping people achieve their home ownership dreams should we ever experience another unprecedented crisis.