A national transition to a completely digital mortgage application process will eventually benefit the mortgage broking industry, according to an industry leader helping to drive this technological change.
Marcus Price, CEO of Property Exchange Australia (PEXA), discussed what he called one of the most significant changes since the 19th century: the digitisation of lending processes.
PEXA itself was established in 2010 to meet the Council of Australian Governments’ goal of forming a single, nationwide e-conveyancing solution to the property industry. The exchange now acts as a gateway to government registries which have also digitised their own processes.
“When PEXA started in 2010, it was met with exhilaration but mainly cynicism,” Price said in a speech entitled Road to the Australian Digital Mortgage at the AB+F Randstad Leaders Lecture Series 2017 in Sydney on Thursday evening (1 June).
“In most cases, we were told that this is an industry where it’s just not going to work. The state governments are never going to support this and cooperate, the banks will never use it, you’ll never get the data standards done, never get legislation passed, etc.”
Fighting against this industry-wide pushback, PEXA has made enormous inroads since it started, Price said. With the exchange first significantly transacting at the beginning of 2015, most of the firm’s achievements have been reached over the past two years.
These milestones include signing up 115 financial institutions (representing 98% of the financial market), 90% of large volume practitioner firms, and over 4,000 legal and conveyancing firms.
“There has been $50bn of property transacted already through the platform. Seventeen per cent of all lodgements today are electronic – we haven’t really bubbled up to consciousness yet as it’s all happened very quickly – and 49% of refinances are electronic.”
This type of digital transformation provides greater speed, efficiency and transparency, Price said, with PEXA able to do mortgage refinancing in 20 minutes from start to finish in the best case scenario.
As well as electronic VOI, e-loan contracts and digital lodgements, the PEXA platform also allows for digital tracking through the SettleMe app so consumers can see what is happening every step of the way.
While a true end-to-end process was previously possible, this had only been attempted by one or two lenders as a kind of experiment, Price said.
“We can actually streamline this process from start to finish now. The information can flow from the very start of the process, like the credit assessment, all the way through to the mortgage document. You won’t have to re-key. The systems will start talking to each other. We’ll see a generation of mortgages that are never signed any other way except electronically.”
The mortgage broking industry can become the core introducer of these e-products and services if it plays its cards right, Price told
Australian Broker.
“[Brokers are] still part of the value chain. They’re clearly going to be the introducers of those things,” he said. “From their point of view, I think it’s going to reduce the paperwork they’ve got right now and the administrative load.”
However, he warned that there was a risk for brokers who decide not to keep up with this digital shift.
“You wouldn’t want to ignore it. You wouldn’t want to get left behind by that technology because other brokers will enter that market and provide ways of doing that.”
“Subject to the fact that you’ve got to move with those times and keeping abreast of that technology, I think it’s quite a good future for [brokers]. We see distribution becoming broader over time.”
At the time of writing, NSW, Victoria, WA and SA had put in the following timelines for their transition to digital mortgages:
| |
NSW |
Victoria |
WA |
SA |
| Standalone mortgage discharges |
Mar 2017 |
Aug 2016 |
Aug 2016 |
Apr 2017 |
| Standalone mortgages (consumer) |
Mar 2017 |
Aug 2016 |
Aug 2016 |
Apr 2017 |
| Standalone mortgages (commercial) |
Aug 2017 |
Aug 2017 |
Aug 2017 |
Q4 2017 |
| Refinances |
Aug 2017 |
Aug 2017 |
Aug 2017 |
Q4 2017 |
| Standalone caveats and withdrawals |
Jul 2018 |
Dec 2017 |
|
|
| Non-ADI discharges, mortgages and refinance |
Jul 2018 |
Dec 2017 |
Oct 2017 |
|
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