Buying a house is one of the biggest financial decisions that most people will make in their lifetime, and outdated systems in the mortgage sector also mean that it is viewed as one of the most stressful among applicants.
Research revealed that nearly a fifth (17%) of Brits wish they had chosen to rent for longer instead of applying for a mortgage, due to the stress and inefficiency associated with the mortgage process.
Shockingly, half of the people surveyed who had applied for a mortgage revealed that the feeling they most associate with the mortgage application process is anxiety.
Many highlighted that working habits, lifestyles and relationships were also affected, with nearly a quarter (22%) of younger adults (aged 18-24) admitting to calling in sick to work due to stress triggered by their mortgage application.
When asked about addressing the problem, three in 10 people (30%) said that a better understanding of the process beforehand would have helped, along with fewer delays (37%), less paperwork (36%) and better online tools (15%).
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Legacy mortgage technology not catching up
There is no doubt that legacy tech has lingered too long in the mortgage sector and is a major contributor to the lengthy and inefficient mortgage application process that many borrowers are finding so stressful.
Many lenders are at the mercy of legacy tech too. It is expensive to maintain, slow to change and frequently comes with issues about updates that have not been applied or are missing.
Legacy tech causes pain for borrowers, brokers and lenders. The current systems are just not agile and robust enough to keep up with a constantly evolving market and are not only hindering efficiency, but are costly to maintain and, as time goes on, may be less capable of providing acceptable levels of protection against viruses and other threats – in an economy where being in and out of markets quickly can make a material difference to profitability.
While digital innovation across banking and lending is advancing, 75% of banks are still struggling to implement new solutions due to their legacy infrastructure. The outdated systems of yesteryear cannot keep pace with modern data demands and fall down in crucial areas such as data reporting.
Improving the systems
The need for lenders to up their game has never been more pressing. The new Labour government is putting its commitment to creating more affordable housing at the forefront of its plans over the next five years, while volatile swap rates continue to impact pricing changes.
If lenders need to pivot rapidly into new niche markets or need to respond to new pricing dynamics, the technology has to be up to the job.
While a complete overhaul of processing systems may seem like a daunting task, particularly for smaller lenders, the right platform can come with a new business model that allows smaller players to scale on a pay-to-play basis while they and their borrowers enjoy the benefits available to larger lenders.
Cloud native technology offers a lifeline to modernising the mortgage application process and promoting a healthier financial environment where homebuyers feel more in tune with the process and brokers are not hindered by outdated systems.
A coordinated effort is required to make the buying process more transparent and inclusive, enabling real-time data sharing between brokers, banks and consumers, and removing legacy technology from the equation altogether.