How Technology Has Helped the UK Mortgage Industry Through The COVID-19 Pandemic

The COVID-19 pandemic has changed the way many of us work. Lockdown, social distancing regulations and new health and safety measures have forced businesses to rethink how they operate, whether that's embracing homeworking or ramping up their online services.

For the mortgage industry, which has always been heavily reliant on face-to-face transactions, it was a case of adapting or risk grinding to a total standstill when the outbreak took hold. But brokers, lenders and estate agents have proven resilient in these unprecedented times, turning to digital technology to continue serving customers while seeing them in person was impossible.

Despite the economic impact of the virus and many mortgage providers having to pull products from the market as a result, customer demand remained. There were scores of prospective borrowers who began their applications pre-lockdown, and no doubt just as many who were frustrated at the notion of having to delay their plans because the property market was in limbo.

Customer communication in the COVID age

While some delays and disruption were inevitable during those early months of lockdown, mortgage lenders and brokers turned to video conferencing applications such as Skype, Zoom and Microsoft Teams to keep their customers updated throughout the pandemic. These tools have proved vital in the absence of in-person meetings, allowing some mortgage applications to stay on track despite an increase in declined mortgages.

Some brokerages and mortgage companies were, of course, already using video conferencing apps to some extent, but their wider adoption can only be beneficial as the industry finds its feet in a post-COVID world. Customer waiting times have been reduced due to the removal of commutes from the equation and brokers can operate without geographic restrictions.

"Technology has been absolutely invaluable during the pandemic, not just for us as brokers but for the lenders, our customers, solicitors and everyone else involved in the process," says Chris Kenny, Mortgage & Protection Advisor with UK-based brokerage Finance Advice Centre.

"It's been of particular help to certain groups like first-time buyers who may not know as much about the house-buying process and find it rather daunting, as well as the older generation. Being able to put a face to the voice on the end of the phone has really helped provide an element of reassurance when there isn't much of that elsewhere in the world right now.

"It's also been of great help behind the scenes for us, as due to social distancing, all of the conferences, roadshows and other events that we attend have moved online. They're incredibly important as they're an excellent medium for us to maintain the relationships we have with the lenders across the market, as well as keep up to date with new products and developments."

Mark Dryden, Technical Director at London-based financial technology provider DPR Group, agrees: "What lockdown has done is accelerate the evolution of more traditional brokers. Luckily many have been able to work during a challenging six months and it's been technology that has continued to enable brokers and allow them to function and deliver true value to their customers. 

"And of course, for brokers who haven't typically embraced those technologies, it's undoubtedly been a transformative period where the alternative wouldn't have been pleasant."

Figures from the US market suggest there was pent-up demand from house-buyers after the coronavirus crisis disrupted the spring season. According to the Mortgage Bankers Association, mortgage applications in mid-August were 33% higher than a year ago. Across the pond in the UK, it's a similar story. Legal & General Mortgage Club has reported "unprecedented" demand on the housing supply post-lockdown, and digital technology will no doubt prove vital to mortgage brokers and lenders and both sides of the Atlantic as they scramble to tackle this backlog.

Automated valuations offer a workaround

Restrictions on customer consultations wasn't the only issue COVID-19 dumped on the mortgage industry's doorstep. The suspension of on-site valuations presented its own challenges, but automated valuation models (AVMs) offered a workaround solution. Physical valuations are, of course, now back on the agenda with social distancing and appropriate PPE in place, but AVMs could yet provide an indispensable fallback in the event of local lockdowns or a dramatic COVID spike.

"AVMs have arguably been the saving grace of the mortgage industry," Kenny says. "When lockdown started and surveyors couldn't go out and do their jobs, the whole industry over the course of a few days pretty much ground to a halt. Not only could the banks and lenders not get their valuations done, prospective buyers couldn't view properties either. 

"Being able to use data from comparable sales and other sources was a great help in not only clearing the backlogs, but also in speeding up the process in general. They're instantaneous, so there's no waiting days for a surveyor to go out, view the property and compile a report which then goes into an underwriter's queue. The cherry on the cake is that AVMs are usually free!"

Virtual property tours filled a void

It isn't just mortgage brokers and lenders who've been forced to seek innovative, tech-based solutions to the problems the virus has presented. Estate agents were unable to offer on-site property viewings, and that threatened to scupper countless potential transactions. 

To bypass this hurdle, some firms turned to virtual property viewings to offer customers digital, self-guided tours of the premises piquing their interest. According to UK-based estate agent Zoopla, some customers are willing to make an offer on a property based on the strength of a virtual viewing alone, and this technology showed signs of taking off during coronavirus lockdown.

Obviously, a virtual property tour carried out while huddled over a laptop or tablet display is no competition for an on-site viewing, but they can be a useful stopgap while the latter is impossible. Furthermore, it's important to keep in mind that this technology is still in its relevant infancy, and could yet play a key role in the industry, especially if there are future COVID spikes and lockdowns.

The tech is here to stay

For many businesses within the global mortgage industry, using technology such as video calling, automated valuations and virtual tours was nothing new, but its wider adoption during the pandemic was arguably overdue. These systems have brought many benefits to a sector that was largely paper-based before, helping lenders save time and brokers work without geographic limitations.

"With the large number of people expected to continue working from home for the foreseeable future, video conferencing will become an integral part of many business setups and I fully expect to see advancements in the features and benefits of such software to come to the market in the near future," Kenny predicts.

"I would like to see AVMs and virtual tours maintain the activity levels that they have enjoyed in recent months as they have both been incredible time and cost-savers to businesses and customers alike. They've provided good stimulation to the housing market when it's been sorely needed and made an often stressful process much easier and straightforward for buyers and sellers alike."

Dryden adds: "These technologies are absolutely here to stay - but let's not stop there.  There are plenty of other parts of the mortgage process that continue to be improved.  

"Client on-boarding through an intelligent chat interface that performs the initial due-diligence and on-boarding of new leads establishes a digital relationship, provides value to the customer and more importantly qualifies the lead, going beyond an enquiry form with criteria, affordability and product sourcing into one simple client report.  

"Digital e-signatures removes much of the paperwork that is passed back and forth between brokers and their customers making it ideal for Terms and Conditions or the Recommendation Reports.  Broker AML and Credit Reports through Experian provides enhanced customer due-diligence tools by providing verified information that flows into the FactFind ensuring that advice is based upon correct data and removing unnecessary delays as cases progress. 

"Financial services have traditionally been slow to adopt new technologies - the lockdown has caused many good brokers out there to reconsider and join those that have ridden out the pandemic by using the right technology for them and their customer base."

As the mortgage world continues to adjust to a new normal, these technologies will remain a key part of its arsenal, and for many businesses, that will be the case when COVID is a distant memory.