UK Mortgage Market: Tackling COVID-19 Through AI-Based Solutions

UK Mortgage Market Tackling COVID-19 Trough AI-Based Solutions

The novel coronavirus has had a major impact on every industry and sector, including the housing and mortgage market in the United Kingdom (UK). Both the buyer as well as the lender have been affected by COVID-19.

Due to lay-offs, furloughs, and pay cuts, house owners suffered from mortgage debt. Lenders, on the other hand, witnessed a drastic drop in mortgage transactions, as many people refrained from buying houses.

But with the ease in lockdown restrictions and the multitude of cases decreasing due to vaccinations, the loan origination process has seen a substantial recovery in its numbers.

Furthermore, the implementation of Machine Learning (ML) algorithms and Artificial Intelligence (AI) technology in the UK mortgage sector might just prove to be a great boost that the industry requires.

Summary of the UK Mortgage Market Since the Beginning of the Pandemic

Coronavirus may have originated in 2019, but it affected the entire world in 2020 and has managed to stretch itself into 2021 too.

According to a comprehensive study done by the Intermediary Mortgage Lenders Association (IMLA)’s Mortgage Market Tracker, along with the reports from the Bank of England, the gross mortgage lending saw a significant drop in the second quarter of 2020.

The conversion rates from offers to successful transactions also saw a dip in 2020’s second quarter, hitting a low of 57% in June.

But with the removal of restrictions, mortgage lending, as well as the confidence of intermediaries, increased and reached pre-pandemic levels. The conversion rates also witnessed an increase to 75% in the first quarter of 2021.

The UK Government’s Response

The mortgage origination process works when you pay a deposit amount to the lender. During the first phase of the pandemic, most of the lenders raised this deposit amount to 15% of the property value.

That is because as many as 95% of deposit mortgages were removed by the lenders to avoid any risk of loss. In fact, the number of mortgage products Mortgage Market Trackerdropped by almost 50% in the first few weeks of the pandemic itself!

At the same time, most of the buyers couldn’t afford these high deposit rates. This caused a major dent in the mortgage industry.

As a result, the government launched a new mortgage lending UK scheme, during the March 2021 Budget, called the “Mortgage Guarantee Scheme”.

The scheme encouraged banks and lenders to bring back the 95% mortgages as the government agreed on partially compensating the losses incurred by the lender if the buyer failed to pay the mortgage. It effectively brought the deposit from 15% to 5%.

The Mortgage Guarantee Scheme is available to both first-time home buyers as well as home movers on properties that cost up to 600,000 pounds.

Flaws and Drawbacks in the Current Mortgage Process

The mortgage industry has been recovering slowly since the first phase of COVID-19. Yet, some people are still hesitant in moving forward with mortgages.

The whole loan origination process is filled with numerous obstacles. As the process is old-fashioned and conventional, it is very complex and time-consuming. The overall efficiency of the system is less.

In times with social distancing responsibilities and work-from-home possibilities, the traditional mortgage process needs a new approach.

Viable Alternatives to the Mortgage Origination Process

One industry that has thrived during the pandemic is the advanced technological solutions industry. Many people and businesses are starting to understand the benefits of Artificial Intelligence and Machine Learning in streamlining the workflow.

This is where companies like Digilytics can prove to be helpful. Digilytics offers AI based mortgage lending product that simplifies the mortgage origination process.

The Digilytics product called RevEl is a revolutionising mortgage origination leveraging AI that automates a majority of the mortgage process. This leads to higher efficiency and makes the process time-saving.

Features of RevEl


Digitalisation

Due to social distancing and the importance of human sensitivity, digitalisation has come to the forefront.

With the help of RevEl, operation costs can be significantly reduced as tonnes of paper can be saved with digitalised documents. It also reduces human interference and human error in the handling of paper documents and data.

To add more to its benefits, digitalisation using the ai-based loan origination system is also eco-friendly.

Intelligent Data Processing

Using mortgage specific AI tools, RevEl automates the application processing stage. It can easily categorise documents, search and extract data, compare different document pages, and can automatically generate tasks based on the information provided in the application.

Predictiveness

Machine learning specific mortgage models simplify the underwriting stage in the loan process by allocating underwriters to different applications based on the data. RevEl can also aid a loan processor through its predictive models.

This can greatly assist underwriters in their decision-making, especially during times like the pandemic, as it makes verification of assets, debt, income, and property details of a potential buyer contactless.

Real-Time Analytics

The RevEl Tracker module offers glass-pipe tracking and real-time analytics. Once all the documents are uploaded and processed, it provides data and reports on its consistency, correctness, and completeness.

These key metrics are displayed on an interactive artificial intelligence dashboard that can also help in the underwriter’s decision-making.

As everything is stored on the cloud and is accessible at the touch of your finger, handling physical documents in offices can be eliminated. This way, AI-based solutions encourage work-from-home.

Impact of Digilytics


Digilytics has had a huge impact on the artificial intelligence mortgage industry through its user-friendly interface, automated tools, and predictive analysis.

  • The time taken to fund has reduced by 40%
  • The overall cost of the loan process has also reduced by 30%
  • It has led to a 15% increase in gross lending
  • Processing time reduced by 65% due to RevEl’s automatic features
  • The average intervention time per case averages over a minute only

Conclusion


Digilytics RevEl has the capability of reforming the way things go about in the mortgage industry. From step one in handling applications to the last step of funding, RevEl has made the loan origination process a breeze!

This makes the mortgage origination process easier, quicker, and more streamlined for the buyer as well as the lender, mainly during times like a pandemic and crisis.

You, too, can use Digilytics RevEl in the lending processes.

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