Mortgage processing times have been reduced by 30% in two years, a report suggests.
They have dropped from an average of 14 days in 2022 to 10 days this year.
The findings are part of the 2024 Mortgage Efficiency Survey by Finova and MSO.
The report suggests lenders are harnessing technology to improve processing times and deliver a faster service to borrowers.
It surveyed 43 lenders across Britain from May 2024 to June 2024.
These include high street lenders as well as larger building societies and smaller lenders. Challenger and specialist banks were also involved.
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Although high street lenders have taken the lead in processing times, larger lenders currently process applications in 11 days on average, while smaller regional lenders have cut their time from 23 to 19 days in the last year.
The report stated that challengers and specialist banks continue to face longer processing times, which average 28 days due to their focus on more complex lending cases.
It went on to highlight the headwinds facing the buy-to-let (BTL) industry, suggesting rising rates and regulation were beginning to take their toll.
This year saw BTL lending across all lenders fall back to 26%, down 3% from last year.
Technology a driver of success
The report went on to state that 91% of mortgage applications were sourced through intermediaries this year, up from 90% last year.
Meanwhile, technology proved a key driver of success for lenders, with 75% rating their satisfaction with automation in the mortgage process between three and four out of five.
In addition, 61% of lenders said their product launch processes have improved since the mini Budget.
Many attributed this to operational changes such as streamlining approvals and investing in new technologies.
A total of 56% believed that they had made improvements in product criteria and policy changes.
However, larger societies and smaller regional lenders feared that they had fallen behind.
Steve Carruthers, business development director at Finova and MSO, said: “The mortgage market has historically been slower to innovate than other sectors, making it all the more exciting that lenders are finally embracing new tech and unlocking its potential.
“Technology must be harnessed as a co-pilot – not a replacement for humans – and our hope is that the developments highlighted in our report signal the beginning of an era where innovation drives real change for borrowers across the board.”
Broker response
Brokers responded to the findings, saying there had “definitely” been an improvement in processing times, but explained there was a wider picture to consider.
Justin Moy, managing director of EHF Mortgages, said: “There may have been a general improvement, but if you have a case that goes to manual underwriting then I would say the timescales are worse.
“Typically, the questions asked are more rudimentary than ever, thus taking up additional processing time for us as well as the lender.
“To balance there, we are seeing more automated underwriting, including income validation with HMRC and online valuation models, so for the right client and situation, we can have an offer in an hour, or it will take weeks with human intervention.”
More innovation required
Dariusz Karpowicz of Albion Financial Advice said: “Yes, there has definitely been improvement, and it’s great to see high street lenders cutting down their processing times from 14 to 10 days.
“However, there’s still a lot of room for innovation. With technology advancing so rapidly, things like keying a lot of information manually that can be checked using online integrated systems should already be a thing of the past.
“Some lenders are leading the way by utilising open banking for income verification, desktop valuations, and offering mortgages in as little as four days.
“This should be the standard across the board. Now if only conveyancers could take the hint, because that side of things seems to be getting slower every year.”
Scott Taylor-Barr, principal adviser at Barnsdale Financial Management, said: “Does it really matter? I don’t mean to sound flippant, but when it takes local authorities on average a whole month to reply to a conveyancer’s enquiries, then taking four days off the time it takes the lender to issue the mortgage offer is a drop in the ocean.
“While it’s always good to have speedy service and having the offer gives everyone the peace of mind that that mortgage is all agreed, in terms of the total time it takes to complete the overall transaction, it hardly moves the needle.”
