For the longest time, lenders struggled with a serious logistical challenge – the slow market time for releasing a new and fully compliant mortgage product.
The average seven to 10-day schedule for checking and unveiling new mortgage products was a standard, but these relaxed timelines are no longer sufficient.
Just under two years ago, the Truss government unveiled the mini Budget, a fiscal announcement that sent shockwaves across the financial services sector. At one crucial point, almost 1,000 mortgage products were withdrawn in one day.
Lenders worked all hours to adapt to an erratic interest rate environment, and what were the results? Many exhausted team members and thousands of frustrated borrowers.
Such disruptions were understandable back then – it was an unprecedented market event – but as we turn the corner into a more stable phase in the housing market’s history, borrowers will expect lenders to have installed contingencies.
What happened in September 2022 cannot repeat itself.
Held back by older technology
One way forward is granular and dynamic pricing engines. As lenders compete for business in a challenging market, digital tools will become an essential and not an optional add-on for those looking to service customers with speed and fairness despite a volatile market landscape.
However, our industry still has some way to go before seven to 10-day market terms are consigned to history.
We must accept the facts: when it comes to technology, certain aspects of the mortgage market still lag behind other industries. Many lenders are still operating outdated legacy systems that lack flexibility when it comes to pricing and product management. Such an approach weighs heavily on resources, as the manual effort required can be time-consuming and prone to errors.
It results in long product to market times, which can be devastating during a time of economic uncertainty. Ultimately, these challenges make it harder for lenders to offer competitive rates at pace, create new mortgage products and variants, and even leaves them struggling to effectively assess and manage risk.
Something must change, and the solution lies with technology.
Speeding up mortgage product timescales
Taking a more streamlined approach is critical for lenders to compete for business in today’s market. One way they can achieve this is by leaning on technology to adopt a holistic approach and price competitive rates in a timely fashion.
Top notch digital tools should be able to automate mortgage product repricing in response to abrupt changes in the financial markets. New pricing engines can draw upon rich data to adjust rates and fees based on real-time market activity.
Some even have an ‘always on’ pricing approach that reduces the impact of last-minute price changes on brokers, thereby safeguarding clients and their mortgage applications.
Our hope is that the days of sluggish product launches and ‘one-size-fits-all’ mortgage products are over. Lenders must integrate dynamic pricing tools into their standard services.
A data-rich affordability model will not only reduce the lender’s own risk, but it will also enable that lender to underwrite loans for an even wider range of customers at a much more efficient rate.
At a time when rates are shifting and changing faster than many legacy systems can compute, lenders must consider innovative digital tools that can slot into their existing origination platforms and generate more rapid and tailored decisions to keep pace in an evolving market.
The seven to 10-day market time must become a thing of the past if our industry is to meet the challenges of the future.
