Lending Zone: The Need for Speed

03 November 2014

A fast and seamless origination process will attract new customers looking for fixed-term mortgages, says Capita Mortgage Software Solution's Financial Services chief executive officer Chris Thompson.

Since 2012, sales of fixed-term mortgages have risen by 40 per cent. In the coming months, the first of these customers will be reaching the end of their fixed term period and, faced with the prospect of moving to a variable rate, some will prefer to switch provider in search of a better deal.

However, it is important to provide a fast and seamless origination process to attract these discerning new customers.


The Royal Institute of Chartered Surveyors has reported that housing demand has fallen in the UK over the last three months. It attributes the decline to a continuing squeeze on workers’ pay packets and the prospect of higher interest rates. It is probable that this will be reflected by a corresponding decrease in new mortgage business.

Predictions vary over the exact timing of an increase in interest rates by the Bank of England but it is a question of when, not if. An increase will have implications for the first-time buyer market as well as those who would struggle to sustain their current mortgage payments. There is, however, going to be a spike in demand for new mortgage products but it is likely to come from a different source.

The Financial Conduct Authority reports that fixed-rate mortgage sales increased by 40 per cent between 2012 and 2013 and now make up nine in every 10 mortgages completed in the UK in the first quarter of this year. For many of those customers, the initial period which guaranteed the fixed rate soon comes to an end. Their existing borrowing will be moved onto a variable rate and, for some, the uncertainty of this will prompt them to look elsewhere.

Streamlining the process

When seeking to attract new clients who are already in possession of a mortgage, there will be fierce competition not just from the existing lender but from other potential mortgage providers ready to step in should a problem arise. So it is important for every potential hurdle – from the initial enquiry through all stages of the application process – to be as straightforward and quick as possible.

Yet the MMR has placed a requirement on lenders to implement a more comprehensive sales process, meaning potential customers need to be guided through a longer series of steps before they can get a mortgage approved.

While this will ensure customers’ needs are appropriately and expertly met, it can also result in a slower overall process. The only way to address this is to ensure the right foundations are already in place to make the advice process efficient.

The role of technology

This can be achieved by using technology to simplify the mortgage origination stages. For example, the advice process can be streamlined by automating steps and documenting the advice electronically in cases where it is necessary to demonstrate regulatory compliance.

The more information that can be gleaned about a customer in the initial enquiry stage – a step that is often web-based – the more seamless, streamlined and speedy the process of telephone advice can be. The mortgage origination technology used by the mortgage adviser also plays a big part.

We have witnessed lenders turning to outsourcing technology to achieve efficient processing of all types of financial products from initial enquiry to release of funds. Mortgage origination systems can help advisers demonstrate compliance with regulations throughout the advice process by logging the necessary information and formulating reports.

Technology can also assist with affordability checks to ensure the adviser is confident in their decision that the customer has a mortgage they can maintain. It can also log information to provide evidence for this. By reducing the administrative burden of regulation, it leaves the adviser with more time to do what they do best. This is of course delivering mortgage advice and matching clients to the right mortgages for their individual needs.

Throughout the mortgage origination process, there are a number of stages where potential customers could choose not to continue. For example, if the information available on a provider’s website is not clear and simple, this could result in someone choosing another lender. Similarly, if the process of delivering advice seems cumbersome and time-consuming, the potential customer could choose to go elsewhere for advice.

Automated systems also help to guide advisers and their clients through the mortgage origination stages, eliminating any unnecessary paperwork, simplifying the process of delivering advice and often reducing the time needed.