Mark Blackwell, reflects on a new industry mindset: The goal doesn’t have to be better customer experience or efficiency gains or improved accuracy in risk management. It can be all three.
For mortgage lenders, assessing mortgage origination risk is a complex business. In an economy that increasingly demands that lenders offer higher loan-to-values over longer terms to meet the needs of UK homeowners, it’s even more important to ensure that this property risk assessment is as comprehensive as possible.
In July, the Prudential Regulation Authority announced a review of its loan-to-income (LTI) ratio requirements, with the ultimate aim being to allow individual lenders to increase their share of lending at high LTIs – while not increasing the aggregate proportion of high LTI lending across the market as a whole.
All lenders will tell you the paramount consideration when it comes to approving an application is the borrower’s ability to repay. As the LTV and LTI increases, the repayment risk becomes more concentrated. Consequently, accurate asset valuations become more pertinent – and that requires access to large datasets that contextualise valuations within a changing environmental and regulatory landscape.
Before origination decisions even become a consideration, however, lenders need to get business through the door. This is proving extremely competitive at the moment – there is a flood of capital looking for a home in the UK housing market and it’s putting immense pressure on pricing. For mortgages where the criteria is straightforward and LTVs are low, pricing is winning the day.
For the tier of lenders that must compete based on a more nuanced approach to criteria and slicker service for intermediaries, managing processes is becoming increasingly important. Valuation management is an area that can make a huge difference to broker and borrower and underwriter experiences.
Ask any intermediary where their frustrations lie and the majority will tell you, after conveyancing hold-ups and rekeying of customer information, managing their clients’ expectations when it comes to timeframes for getting things done is it.
Why valuations cause delays
Unfortunately, valuations can play into this significantly. Often, there’s not a good explanation for the borrower either – we in the industry understand why it can take more than a month to book a mortgage valuation, but for the typical British consumer it’s, frankly, flummoxing.
It doesn’t need to be this way though. There are a few very basic reasons for hold ups in the valuation process that sits alongside a mortgage application. First is the ability to book in a valuation at a time that suits the homeowner and valuer. You’d think this would be straightforward and it should be. However, depending on the platforms and integrations lenders have in place to manage their valuation pipeline, it can fall over very quickly. The issue is a lack of data , a lack of interpretation of that data and lack of transparency of the transaction.
Systems that cannot record enough of this data and which, crucially, cannot interpret it to produce a workaround results in delays. And they’re unnecessary all too often. Hence borrowers’ and brokers’ frustrations.
The power of data and integration
The second is around post-valuation queries – and, honestly, the issues are the same. The technology available today is able to gather and record considerably more data points than has been previously possible. Integrating valuation management systems with huge databanks of information relating to environmental and flood risk, to infrastructure risk, geological and, especially, title registrations can eliminate the majority of post-valuation queries before they’ve even become a question.
The third challenge for many lenders when it comes to valuation process management is the accessibility of all the relevant documentation by all parties that need access to it. Whether delays are unavoidable or not, good clear communication with customers will allay the vast majority of their frustrations. That requires access to accurate information, quickly.
A solution for all
This is where our Integrated Lender Hub platform is transforming customer and broker experiences. It is a powerful, all-in-one platform that connects lenders with panel managers and surveying firms, making mortgage valuations faster, more transparent, and more efficient.
It provides real-time job updates, transparent case tracking, and seamless built-in messaging - all in one place. With automated valuation triage and PVQ management powered by configurable rule engines, lenders gain full visibility and control over their valuation pipeline.
The goal doesn’t have to be better customer experience or efficiency gains or improved accuracy in risk management. It can be all three.
